Syntax. AMORLINC(Cost,Date,First_Period,Residual_Value,Period,Rate,Basis)
Definition. This function calculates the depreciation amount in the desired period by using linear depreciation of assets. The calculations are based on the French accounting system, but can be adjusted to tax laws of other countries or regions with a few additional considerations regarding the depreciation calculation.
Arguments
Cost (required) The purchase cost (net purchase price plus incidental purchase expenses minus reduction of purchase cost) of an asset. If you don’t use a number, the error
#VALUE!is displayed. If the entered number is negative, the error#NUMBER!is displayed.Date_Purchased (required) The purchase date of the asset; that is, the beginning of the depreciation.
First_Period (required) Refers to the date at the end of the first period in the depreciation period. The period gets the number zero.
Salvage_Value (required) The anticipated remaining value of the asset after the years of depreciation. If you are using a number that is larger than Cost, the error
#NUMBER!is returned. The same error value is displayed if a negative number is used.Period (required) Specifies the time period for which the depreciation amount should be calculated. Only use integers that are greater than or equal to zero.
Rate (required) The (initially linear) depreciation percentage, usually determined reciprocally to the planned depreciation duration (10 years yields 10 percent, 5 years yields 20 percent, and so on).
Basis (optional) Defines the method to use for counting the days. The possible values were shown earlier in Table 15-2.
Background. Depreciation is used to determine the loss of value of an asset and make that loss visible. It should not be confused with depreciation because of abrasion/use, which refers to the cost of purchasing an asset as part of operation expenses from a tax point of view.
The depreciation percentage that is determined by the rate is a linear depreciation rate and thus specifies the depreciation duration.
Note that the depreciation amount of the first period gets the number zero. It is prorated for the year, and the days are counted by using different methods.
If you are depreciating to a residual value of zero and the first period is not an entire year, the end result will contain one more period than initially anticipated. What is left over from the abbreviated first period is depreciated in the final period.
If you are depreciating to a residual value that is larger than zero, the depreciation usually ends before the final (originally assumed) period is reached. The reason for this is that the depreciation percentage is always used against the cost and not (as might be customary in some countries) against the difference between cost and residual value.
If you want to use this function, for instance, according to the German tax law, you can work with Basis = 4 in the case of a complete depreciation (residual value =0) and a purchase date (argument date) that is the first day of the month when the actual purchase took place. Then select January 1 of the following year as the date for First_Period. This ensures that the starting month of the purchase is considered with 1/12 of the cost. Corresponding examples will convince you very quickly that the last day of the previous month with the end of the period on December 31 should not be chosen as the purchase date. (For example, from February 28 until the end of the year there are 302 days and not 300).
Example. On October 5, 2010, you purchase a personal computer for $3,000. Because of the three-year depreciation duration, the depreciation percentage is 33.333 percent. The following formula calculates the depreciation of the first year (period 0):
=AMORLINC(3000,DATE(YEAR("5/10/2010"),MONTH("5/10/2010"),1),
"1/1/2011",0,0,33.333%,4)where instead of the concrete values, the cell references to cells with these values should be displayed. You can also recreate the result of $250.00 with
=3000*33.333%*DAYS360(DATE(YEAR("5/10/2010"),
MONTH("5/10/2010"),1),"1.1.2011",TRUE)/360Instead of using DAYS360(), you can simply use
=3000*33.333%*(13-MONTH("5/10/2010"))/12as an alternative.