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