How to use the AMORLINC Function in Excel

In this article, we will learn about how to use the AMORLINC function in Excel.

AMORLINC function calculates the amount according to the life of product each accounting period of product life. The formula takes input argument which are explained as shown below.

cost : total cost amount

purchase date : purchase date of depreciation

first period end : first period end date

salvage - salvage value at the end of the life of the asset

rate : depreciation rate

[basis] - [optional] Day count basis. Default is 0 and for more details, watch the below table.

Basis Day count basis
0 US (NASD) 30 / 360
1 actual / actual 
2 actual / 360
3 actual / 365
4 European 30 / 360

The AMORLINC function returns a depreciation amount each accounting period of asset life on the cost value on purchase giving input as syntax shown below.

Syntax:

=AMORLINC(cost, date_purchased, first_period, salvage, period, rate, [basis])

Example:

All of these might be confusing to understand. So, let's test this formula via running it on the example shown below. Here we will perform the AMORLINC function over values and significance with the numbers.

Use the formula:

=AMORLINC(A2,A3,A4,A5,H3,A7,A8)

Explanation:

A2 : cost value in A2 cell

A3 : Purchase date in A3 cell

A4 : first period end in A4 cell

A5 : salvage value in A5 cell

0 : period value in A6 cell

A7 : rate value in A7 cell

A8 : [basis] cost value in A8 cell

Here all the arguments to the function are given as cell references. Now Press Enter to get the depreciation amount for 0th end of period or the first depreciation.

The function returns $ 250 as 1st depreciation amount for the cost value value $ 5000.

Now copy the formula to the other cells freezing all the amount and changing period value from 0 to 1,2,3,...,n. You got yourself the depreciation amount showing decrement of the amount along the period of life of the asset.

Here the depreciation amount along the life of the asset is shown. Now to check how much value remained from $5000 along the period using depreciation amount is shown below.

This nil value on the 10th period says that the value of the asset becomes zero.

Here are some observational notes using the AMORLINC function shown below.

Note:

  1. Excel stores dates as serial numbers and is used in calculation by the function. So it’s recommended to use dates as cell reference instead of giving direct argument to the function.
  2. Arguments date of purchase, end of first period date & basis are truncated to integers.
  3. The function returns the #VALUE! Error if date of purchase & end of first period date is not a valid date format.
  4. The function returns the #NUM! Error if: 
    1. rate is less than or equals to zero. discount 0.
    2. If the basis argument is either < 0 or  > 4. 

Hope this article about How to use the AMORLINC function in Excel is explanatory. Find more articles on financial formulas here. If you liked our blogs, share it with your fristarts on Facebook. And also you can follow us on Twitter and Facebook. We would love to hear from you, do let us know how we can improve, complement or innovate our work and make it better for you. Write to us at info@exceltip.com.

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