Depreciation means the decreasing of the worth of an asset with time due to its wear and tear. Any valuable thing costs the original price when new, but its value decreases with time at a particular rate. In other words, we can say that the value of an asset decreases at a fixed rate annually. This is when the AMORLINC Function comes into its usage. In this tutorial, we would learn the AMORLINC function for calculating depreciation in excel.
Here we go 😎
When to Use AMORLINC Function of Excel
The AMORLINC function finds the depreciation of an asset for each accounting period. The function can calculate the linear depreciation at a fixed rate depending on the purchase date of the asset.
The AMORLINC function can be categorized under the Financial functions of Excel.
Syntax and Arguments
The following points explain the function arguments for AMORLINC Function.
- cost – The argument refers to the value of asset at the beginning.
- date_purchased – The date on which asset was purchased.
- first_period – The date after which first period starts.
- salvage – The lowest value of asset at the end of its useful life.
- period – This refers to the accounting period.
- rate – This is the rate of depreciation.
- [basis] – This is the method for day count. It is an optional argument. It can have the following values.
Points to Remember About AMORLINC Function
The following points should be kept in mind before actually using the AMORLINC function of Excel.
- The defualt value of basis is 0.
- The Accounting period starts from 0 i.e from date of purchase to the first period date.
- date_purchased and first_period must be valid excel dates. The excel dates start from 1 January 1900. All the dates before that would be invalid and return #NUM! error.
- Salvage cannot be greater than cost. In that case, AMORLINC function will return a #NUM! error.
- The depreciation is calculated without the use of depreciation coefficient.
Read moreAMORLINC Function of Excel – Finding the Depreciation of as Asset