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.

Vehicle Depreciation Calculator Excel

Open your Excel spreadsheet.
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

Apply Straight Line Method

Press ENTER to calculate the vehicle depreciation.

Vehicle Depreciation Calculator 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

Employ Use of Activity Depreciation Method

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

Vehicle Depreciation Calculator Excel

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.