The AMORLINC function in Excel

 

The AMORLINC function in Excel is a financial function used to calculate the depreciation of an asset for a specific accounting period using the French accounting method. It returns the depreciation amount for a given period, based on the initial cost of the asset, the salvage value, and the number of periods over which the asset is to be depreciated.

The syntax for the AMORLINC function is as follows:

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

where:

  • cost: The initial cost of the asset
  • date_purchased: The date when the asset was purchased
  • first_period: The first period for which you want to calculate depreciation
  • salvage: The value of the asset at the end of its useful life
  • period: The period for which you want to calculate depreciation
  • rate: The rate of depreciation
  • basis: (optional) The day count basis to be used for calculations. If omitted, the default value is 0.

The AMORLINC function uses the French accounting method, which means that depreciation is calculated based on the number of days in each period, and the depreciation rate is applied to the cost of the asset minus the salvage value.

Here's an example of how to use the AMORLINC function:

Suppose you purchased an asset for $10,000 with a salvage value of $2,000, and you want to depreciate it over 5 years at a rate of 10% per year. The asset was purchased on January 1, 2022, and you want to calculate the depreciation for the second period, which ends on December 31, 2022.

The formula for calculating the depreciation for the second period would be:

=AMORLINC(10000,DATE(2022,1,1),1,2000,2,0.1,4)

In this example, the basis argument is set to 4, which means that the function uses a 30/360 day count basis for calculations. The result of the function would be $1,836.96, which is the amount of depreciation for the second period.

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