MACRS DEPRECIATION WITH A SPREADSHEET FUNCTION: A TEACHING AND PRACTICE NOTE

ABSTRACT

While Excel™ and Quatlro Pro™ do not have a function MACRS(cost, class life, year), they do have a variable declining balance function, VDB, that can be used to compute annual MACRS depreciation amounts. A literature search of journals and texts did not find examples using this function nor did it find other shortcut approaches to MACRS calculations. A built-in spreadsheet function is clearly superior to relying on hard coding percentages copied from texts or IRS tables or building tables to calculate MACRS percentages. This article 1) describes the underlying definition of the variable declining balance function (VDB), 2( notes some quirks and errors in other spreadsheet depreciation functions and accompanying explanatory material. 3) shows how VDB can be used to calculate MACRS depreciation, 4) provides an example of its use. and 5) suggests useful further developments.