Excel SLN Function
- Syntax
- SLN(cost, salvage, number of periods)
Example
For example if an item was purchased for $10,000 to be depreciated over 5 years with an expected residual or salvage value of $2,000 then the function would be:
=SLN(10000,2000,5)
The function would return $1,600 being $8,000/5
Discussion
The math’s for this function is so simple you might wonder why Microsoft included it at all. This function returns the amount to be depreciated (original cost - salvage value) divided by the number of periods to be depreciated over.
However I would argue that this function is included in the set for two reasons
- Set completeness, this function is one of a logical set that anyone learning accounting will learn about together.
- Using the function will force the user to remember the salvage value, the most common mistake when calculating depreciation in Excel is to forget about the salvage value of the item and hence over-depreciate the item.
Manual Calculation
Manual calculation of this value offers no real advantage over using the function, but FYI to calculate this value manually use the following simple formula:
=(cost-salvage)/number of periods
Use in Accounting
Under the Australian Equivalent to the International Financial Reporting Standards:
- Depreciation should be started when the item is available for use and concludes when either the item is classified as held for sale or the item is derecognised as an asset (written off). Depreciation does not cease just because an item becomes idle or is retired from active use unless it has already been fully depreciated. (AASB116-55)
- Straight line depreciation is appropriate if the pattern of usage of the asset fits the straight line model (AASB116-62). (In practice, if the pattern of usage cannot be determined in an economic manner (i.e. it will cost too much or is too hard to figure out or measure) then the straight line depreciation method is the simplest assumption and the easiest to calculate.
- The depreciation method chosen should be reviewed at least at the end of each annual reporting period (AASB116-61).
- If the pattern of usage changes then the depreciation method should be changed to reflect the current pattern of use (AASB116-61).
Alternative Uses
The math's is very simple and could be put to a number of uses, for example:
- You purchase a box of 24 cans of soft drink with $20 and receive $8.45 change. The price per can is:
=SLN(20,8.45,24)
= $0.45
- Your water tank was holding 20,000 litres but after five minutes of pumping there is 4,000 litres left. The flow rate was:
=SLN(20000,4000,5*60)
=53.33 litres per second
Disclaimer
The author is not a qualified accountant and makes no claim, warranty or other assurances that the accounting information given above is accurate or that it applies in your jurisdiction.