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Using the French Depreciation Add-in Functions

Excel supplies two special functions for making French depreciation calculations,
AMORDEGRC and AMORLINC.

Both functions use a similar set of arguments, including the asset cost, purchase date, date at the end of the first period, salvage value, accounting period, depreciation rate, and basis. You specify the basis as 0 for the US (or NASD) version of 30 days in a month and 360 days in a year; as 1 for the actual number of days in the month and year; 2 for the actual number of days in the month but 360 days in a year; 3 for the actual number of days in the month and 365 days in a year; and 4 for the European
version of 30 days in a month and 360 days in a year.

Using the AMORDEGRC Function

The AMORDEGRC function uses the following syntax:

AMORDEGRC (cost, purchase date, first period, salvage, period, rate, basis)

For example, if you want to depreciate a piece of equipment purchased on July 15, 2000,
for 3,000 French francs, using a salvage value of 600 French francs, a 15% depreciation rate,
and the first accounting period ends on December 31, 2000, you use the following formula:

=AMORDEGRC (3000,7/15/2000,12/31/2000,600,1,0.15,1)

The AMORDEGRC function returns the value 930.

You should know several points before using the AMORDEGRC function:

1. The function uses different coefficients depending on the assetâ ™s estimated life. If the life of the asset falls between three and four years, the function uses a depreciation coefficient equal to 1.5. If the life of the asset falls between five and six years, the function uses a depreciation coefficient equal to 2. If the life of the asset is greater than six years, the function uses a depreciation coefficient equal to 2.5.

2. To fully depreciate an asset, the depreciation rate grows to 50% for the next-to-last period
and 100% for the last period.

3. If you specify the estimated economic life of an asset as a non-integer value between 0 and 5â ”such as 4.5 for exampleâ ”the AMORDEGRC function returns the #NUM! error value.

Using the AMORLINC Function

The AMORLINC function uses the following syntax:

AMORLINC (cost, purchase date, first period, salvage, period, rate, basis)

For example, if you want to depreciate a piece of equipment purchased on July 15, 2000, for 3,000 French francs, using a salvage value of 600 French francs, a 15% depreciation rate, and the first accounting period ends on December 31, 2000, you use the following formula:

=AMORLINC(3000,7/15/2000,12/31/2000,600,1,0.15,1)

The function returns the value 450.

January 8, 2009 | kpbk.com | edit