Depreciation Calculator
Depreciation Calculator
Work out depreciation year by year with the straight line, double declining balance, 150% declining balance or sum of the years digits method. See each year’s charge, the accumulated depreciation and the book value, and compare all four methods on one chart.
Book value under each method
Straight line spreads cost minus salvage evenly. Declining balance charges a fixed rate, 2 ÷ life or 1.5 ÷ life, on the book value left, and switches to straight line in the year that gives the larger charge, so the asset ends exactly at its salvage value. Sum of the years digits charges remaining life ÷ (1 + 2 + … + life) of the depreciable amount each year. Full years are assumed, with no part year convention, and tax systems such as MACRS use their own tables. Amounts work in any currency. The CSV, image and printed report contain the values you entered, nothing preloaded.
How to use this tool
Enter what the asset cost, what it is expected to be worth at the end of its useful life, the salvage value, and how many years it will be used. Choose a method and the schedule appears year by year, with the depreciation charged, the running total and the book value, while the chart compares all four methods for the same asset.
The input people most often get wrong is the salvage value. It is not depreciated, so leaving it at 0 when the asset will still be worth something overstates every year’s charge. The cost should include delivery, installation and anything else needed to put the asset into use.
What the calculation is doing
Depreciation spreads the cost of an asset over the years it earns its keep, so that each year carries a share of the expense. The amount spread is always cost minus salvage; the methods differ only in how that amount is divided between the years.
Straight line gives every year the same share. Declining balance applies a fixed rate, 2 ÷ life for double declining or 1.5 ÷ life for 150%, to the book value left at the start of each year, so the charge shrinks as the book value does. Sum of the years digits gives year 1 the fraction life ÷ (1 + 2 + … + life) of the total, then one step less each year.
Choosing a method: matching cost to use
The point of depreciation is matching: an asset’s cost should fall in the years it helps earn income. A building or a desk gives roughly the same service every year, so straight line fits. A delivery van or a laptop is most productive and most valuable when new, and its resale value drops fastest in the first years, so an accelerated method puts more of the cost where the use and the loss of value actually happen.
Accelerated methods do not reduce the total, only the timing. Over the life of the asset every method charges exactly cost minus salvage. What changes is profit and book value along the way: double declining shows lower profit in year 1 and higher profit later than straight line, with a lower book value on the balance sheet in the meantime.
Book value is an accounting figure, not a price. A five year old van depreciated to 1,000 might sell for 3,000 or for scrap; the difference becomes a gain or a loss when it is sold.
The same asset under each method
| Year | Straight line | Double declining | 150% declining | Sum of years digits |
|---|---|---|---|---|
| 1 | 1,800 | 4,000 | 3,000 | 3,000 |
| 2 | 1,800 | 2,400 | 2,100 | 2,400 |
| 3 | 1,800 | 1,440 | 1,470 | 1,800 |
| 4 | 1,800 | 864 | 1,215 | 1,200 |
| 5 | 1,800 | 296 | 1,215 | 600 |
| Total | 9,000 | 9,000 | 9,000 | 9,000 |
A worked example you can check on paper
A 10,000 machine with a 1,000 salvage value and a 5 year life, depreciated by double declining balance. The rate is 2 ÷ 5 = 40%. Year 1: 40% of 10,000 = 4,000, leaving 6,000. Year 2: 40% of 6,000 = 2,400, leaving 3,600. Year 3: 40% of 3,600 = 1,440, leaving 2,160. Year 4: 40% of 2,160 = 864, leaving 1,296.
In year 5, 40% of 1,296 would be 518.40, which would take the book value below the 1,000 salvage value, so the charge stops at 296. The five charges, 4,000 + 2,400 + 1,440 + 864 + 296, add to 9,000, the same total as straight line at 1,800 a year.
Mistakes that catch people out
Subtracting salvage before applying a declining balance rate. The rate applies to the full book value; salvage only sets the floor where charges stop.
Depreciating below salvage. The book value should never drop under the salvage value; the last charge is whatever brings it down exactly to that figure.
Using a full year for an asset bought mid year. Many businesses and tax systems charge a half year or a number of months in the first year. This calculator assumes full years.
Assuming book and tax depreciation match. Tax rules set their own lives and rates, such as MACRS in the United States or capital cost allowance in Canada, so the two schedules often differ.
Leaving out costs to get the asset working. Freight, installation and setup are part of the cost to be depreciated, not separate expenses.
Popular calculations
Each opens the calculator with those values filled in, and they can be changed once it is open.
Straight line
Double declining balance
150% declining balance
Sum of the years digits
How this was checked
Every schedule was checked so that the charges add up exactly to cost minus salvage and the final book value equals the salvage value. The worked example matches the standard textbook result for double declining balance, and the switch to straight line was checked against hand calculations: a 50,000 asset with no salvage over 10 years switches in year 7, at 3,276.80 a year.
Every address in the lists above was then opened and checked for a distinct title, the right first year charge, a chart that renders, and clean CSV, image and print output containing only that schedule, at desktop, tablet and phone widths.
Common questions
How do you calculate straight line depreciation?
Subtract the salvage value from the cost and divide by the useful life. A 10,000 machine worth 1,000 at the end of 5 years depreciates (10,000 − 1,000) ÷ 5 = 1,800 a year, and its book value falls from 10,000 to 1,000 in equal steps.
How do you calculate double declining balance?
Divide 2 by the useful life to get the rate, 40% for 5 years, and apply it to the book value at the start of each year, without subtracting salvage first. Year 1 on a 10,000 asset is 4,000, year 2 is 40% of 6,000, or 2,400, and charges stop when the book value reaches salvage.
What is salvage value?
The amount the asset is expected to be worth, or sell for, at the end of its useful life. It is never depreciated: straight line and sum of the years digits subtract it before spreading the cost, and declining balance stops charging when the book value reaches it.
Which depreciation method should I use?
It depends on how the asset loses its usefulness and on the rules you report under. Straight line suits assets used evenly over their life; accelerated methods suit assets that lose value or productivity fastest when new. For tax, the method and life are usually set by law, such as MACRS in the United States.
What is book value?
Cost minus the accumulated depreciation to date. After 2 years of straight line on a 10,000 asset at 1,800 a year, the book value is 6,400. It is an accounting figure and can differ a lot from what the asset would actually sell for.
Why does declining balance switch to straight line?
A fixed percentage of a shrinking book value never quite reaches the salvage value, and the charges get very small. Switching to straight line on the remaining amount, in the year when that gives a larger charge, finishes the write off on time. The schedule marks the year it happens.
Related Calculators and Reference
- ROI Calculator: the return an asset earns against what it cost.
- Loan Payment Calculator: the payments if the asset is financed.
- Compound Interest Calculator: what the same money could earn if invested instead.
- Percentage Calculator: turn a depreciation charge into a percentage of cost.
- Break Even Calculator: how many sales it takes to cover fixed costs, including the depreciation charge.
- Present Value Calculator: value an asset’s future cash flows today.
- Car Lease Calculator: how a lease charges you for the car’s depreciation.
- IRS Publication 946: How To Depreciate Property: the US tax rules, including MACRS, for comparison with book depreciation.