Before delving into the specifics of the AMORLINC function, it is important to understand its purpose. The function calculates the depreciation of an asset for any given period, assuming that it is depreciated in a linear manner. It can be used to track the depreciation of various types of assets, including vehicles, buildings, and machinery.
The AMORLINC function requires several inputs, including the cost of the asset, the salvage value, the life of the asset, and the period for which the depreciation is being calculated. It then uses this information to calculate the depreciation for the given period.
The syntax for the AMORLINC function is as follows:
AMORLINC(cost, date_purchased, first_period, salvage, period, rate, [basis])
Here’s what each parameter represents:
– cost: The initial cost of the asset.
– date_purchased: The date on which the asset was purchased.
– first_period: The date of the beginning of the first period for which depreciation is being calculated.
– salvage: The salvage value of the asset.
– period: The period for which depreciation is being calculated.
– rate: The rate of depreciation.
– [basis]: An optional parameter that specifies the type of day count basis to use for the calculation. If omitted, it defaults to 0, which signifies a 30/360 day count basis.
Let’s take a look at some examples of how to use the AMORLINC function in Power BI.
Suppose you have purchased a vehicle for $20,000, with a salvage value of $2,000, and a useful life of 5 years. You want to calculate the depreciation for the first year, using a depreciation rate of 20%. The following formula would be used:
=AMORLINC(20000, "01/01/2022", "01/01/2022", 2000, 1, 0.2, 0)
The result of this formula would be 3,200, which represents the depreciation for the first year.
Suppose you have purchased a piece of machinery for $50,000, with a salvage value of $10,000, and a useful life of 10 years. You want to calculate the depreciation for the first 5 years, using a depreciation rate of 15%. The following formula would be used:
=AMORLINC(50000, "01/01/2022", "01/01/2022", 10000, 5, 0.15, 0)
The result of this formula would be 20,000, which represents the total depreciation for the first 5 years.
The AMORLINC function is a powerful tool for tracking the depreciation of assets over time. By using this function, businesses can ensure that they are accurately accounting for the depreciation of their assets, which can have a significant impact on their financial statements. With the knowledge of how to use this function effectively, businesses can improve their financial reporting and make more informed decisions about their asset management strategies.