How To Calculate Depreciation Using Reducing Balance Method In Excel. I trust you are all well. First, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used (depreciation with the matching principle).

This results in a very fast reduction of the asset’s value. The excel reducing balance depreciation calculator, available for download below, is used to compute the accumulated depreciation by entering details relating to the asset cost (pv), depreciation rate (i) and the number of periods (n). The declining balance method of depreciation, also known as the reducing balance method of depreciation, is a method in which depreciation calculated on the asset is deducted from the book value of the asset at the beginning of the year, the value of which is arrived at by multiplying the depreciation rate to the book value of the asset which has a greater amount in.