Depreciation Calculator
Calculate asset depreciation using various accounting methods.
Asset Information
Depreciation Schedule
| Year | Depreciation | Book Value |
|---|---|---|
| 1 | $9,000 | $41,000 |
| 2 | $9,000 | $32,000 |
| 3 | $9,000 | $23,000 |
| 4 | $9,000 | $14,000 |
| 5 | $9,000 | $5,000 |
Depreciation Summary
About This Calculator
The Depreciation Calculator helps you calculate asset depreciation using various accounting methods. Depreciation is the allocation of an asset's cost over its useful life, allowing businesses to account for the decrease in value of assets over time.
This calculator supports three common depreciation methods: Straight-Line (equal annual amounts), Declining Balance (accelerated depreciation), and Sum-of-Years Digits (accelerated method). Each method has different tax and accounting implications.
Formula & Calculation Method
Depreciation Calculation Methods:
Straight-Line:
Annual Depreciation = (Initial Value - Salvage Value) ÷ Useful Life
Declining Balance:
Rate = 2 ÷ Useful Life (for double declining balance)
Annual Depreciation = Book Value × Rate
Sum-of-Years Digits:
Sum of Years = n × (n + 1) ÷ 2
Year Fraction = (Remaining Years) ÷ Sum of Years
Annual Depreciation = Depreciable Base × Year Fraction
Straight-line provides equal depreciation each year. Declining balance and sum-of-years provide accelerated depreciation with higher amounts in early years, which can provide tax benefits.
How to Use This Calculator
- Enter Initial Value: Input the original cost or purchase price of the asset.
- Enter Salvage Value: Input the estimated value at the end of useful life.
- Enter Useful Life: Input the expected useful life in years.
- Select Method: Choose Straight-Line, Declining Balance, or Sum-of-Years Digits.
- View Results: See annual depreciation, monthly depreciation, total depreciation, and depreciation schedule.
Frequently Asked Questions
What is the difference between depreciation methods?
Straight-line provides equal depreciation each year. Declining balance and sum-of-years provide accelerated depreciation with higher amounts in early years, which can provide better tax benefits for assets that lose value quickly.
Which depreciation method should I use?
The method depends on your accounting standards, tax requirements, and asset type. Straight-line is simplest and most common. Accelerated methods are often used for assets that lose value quickly (like vehicles or technology).
What is salvage value?
Salvage value (also called residual value) is the estimated value of an asset at the end of its useful life. This is the amount you expect to recover when disposing of the asset.
Can I change depreciation methods?
Generally, you should use the same method for the asset's entire life. Changing methods typically requires approval and may have tax implications. Consult with an accountant for specific situations.
Expert Reviewed
This calculator was reviewed by NumCalculators Editorial Team, Multi-disciplinary Expert Team