# How to Create a Vehicle Depreciation Calculator in Excel (3 Methods)

## What is Depreciation?

Depreciation refers to the gradual reduction in the value of an asset over several years. When a business organization acquires assets (which can be tangible, like products, or intangible, like services), their value changes over time. After a certain period, the asset’s value decreases due to depreciation.

### Method 1 – Straight Line Method

In this method, the depreciation value is the ratio of the difference between the asset value and the asset’s residual cost, and the lifespan of that asset.

• Organize your data in columns.
• Cell C6: Initial asset value
• Cell C8: Residual cost
• Cell C7: Lifespan (in years)
• In cell C10, insert the following formula:
`=(C6-C8)/C7`

• Press ENTER to calculate the vehicle depreciation.

Read More: Create Depreciation Schedule in Excel

### Method 2 – Activity Depreciation Method

In this method the depreciation value is the multiplication value of the yearly production unit and the ratio of the difference between the asset value and the asset’s residual cost, and the total production unit of the asset’s lifespan.

• In cell C14, insert the following formula for the first year’s depreciation:
`=((C6-C8)/C9)*C10`

• Press ENTER to get the output.

• Repeat the process for subsequent years using different production units (e.g., C11 for the second year).
`=((C6-C8)/C9)*C11`

### Method 3 – Double Declining Balance Method

Another simple and effective method for vehicle depreciation calculation is the double-declining balance method. According to this method, the depreciation value is the ratio of 2 times the difference between the asset value and the asset’s residual cost and the lifespan of that asset.

• In cell C14, insert the following formula for the first year’s depreciation:
`=(2*(C6-0))/C7`

• Press ENTER to calculate the depreciation.

• Similarly, apply the formula for the second year using the adjusted asset value (e.g., C6C12).
`=(2*(C6-C12))/C7`

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Naimul Hasan Arif

Naimul Hasan Arif, a BUET graduate in Naval Architecture and Marine Engineering, has been contributing to the ExcelDemy project for nearly two years. Currently serving as an Excel and VBA Content Developer, Arif has written more than 120 articles and has also provided user support through comments His expertise lies in Microsoft Office Suite, VBA and he thrives on learning new aspects of data analysis. Arif's dedication to the ExcelDemy project is reflected in his consistent contributions and... Read Full Bio

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