Depreciation Calculator
Calculate annual depreciation of an asset using straight-line or declining balance methods. Useful for accounting, tax, and business planning.
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How to use this calculator
Straight-line spreads cost evenly each year. Declining balance applies a fixed rate to the reducing book value each year.
- 1
Enter the original cost of the asset.
- 2
Enter the estimated salvage (residual) value at end of useful life.
- 3
Enter the useful life in years.
- 4
Choose straight-line for equal annual deductions or double declining balance for faster early depreciation.
- 5
See your annual depreciation amount and book value.
Frequently asked questions
What does straight-line mean in this tool?
This tool uses Annual Depreciation = (Cost − Salvage) ÷ Life, the same amount every year. Book Value after Year 1 is Cost − Annual Depreciation, and Book Value at End of Life is the salvage value.
How does the double declining balance method work here?
The rate is 2 ÷ Life. Each year’s depreciation is the opening book value times that rate, capped so book value never falls below salvage. The result card shows year 1, year 2, the rate and the book value at the end of the stated life.
Does it switch to straight-line late in life?
No. It stays on the declining formula, so with zero salvage some book value remains. A $12,000 asset with no salvage and a 4-year life shows year 1 of $6,000.00, year 2 of $3,000.00 and a book value of $750.00 at the end of life. Some accounting or tax rules prescribe a switch, which this tool does not apply.
What if salvage is zero or equal to cost?
Zero salvage is valid and straight-line then depreciates the whole cost. If salvage equals cost, depreciation is $0.00 every year. A salvage value above cost, a negative cost or a negative salvage returns an error message.
What if useful life is 0?
The tool shows an error that life must be greater than zero, because dividing by zero years has no meaning. For double declining balance, a 1-year life gives a 200% rate that is capped at cost minus salvage, so year 1 takes it all and year 2 is $0.00 (shown with $5,000 salvage on a $50,000 asset).
Does it handle part years or mid-year purchases?
No. Depreciation runs in full years with no convention for the month of purchase or disposal. Use whole-year lives for the declining method, because the yearly loop counts whole years.
Does it follow a tax schedule?
No. Statutory tax tables, such as the schedules and first-year deductions that tax authorities allow, are not modelled. The tool applies the two textbook formulas to the numbers you enter, and a tax adviser should confirm what applies to your asset.
Depreciation methods: straight-line against double declining balance
Two ways to spread the same cost
Both methods start from cost and salvage value and spread the loss in value over the useful life. Straight-line charges an equal amount every year. The declining method charges a fixed percentage of whatever book value is left, so the biggest charges come first and shrink year by year. Neither method changes the total that can be written off, only the timing.
Worked example: the built-in asset
The figures built into this tool are a $50,000 cost, $5,000 salvage value and 5-year life. Straight-line gives $9,000.00 a year, total depreciation of $45,000.00 and a book value of $41,000.00 after year 1. Switching to double declining balance gives a 40.0% rate, $20,000.00 in year 1, $12,000.00 in year 2, and a book value of $5,000.00 at the end of life. In year 1 the declining method charges more than twice the straight-line amount.
Comparing lives and salvage values
The table runs four assets through both methods. The straight-line column is a flat annual charge, while the three declining columns show the rate, the first two years’ charges and what remains at the end of life. The last row has no salvage and does not reach zero under the declining method.
| Cost / salvage / life | Straight-line per year | DDB rate | DDB year 1 | DDB year 2 | DDB book value at end |
|---|---|---|---|---|---|
| $50,000 / $5,000 / 3 | $15,000.00 | 66.7% | $33,333.33 | $11,111.11 | $5,000.00 |
| $50,000 / $5,000 / 5 | $9,000.00 | 40.0% | $20,000.00 | $12,000.00 | $5,000.00 |
| $80,000 / $10,000 / 8 | $8,750.00 | 25.0% | $20,000.00 | $15,000.00 | $10,000.00 |
| $12,000 / $0 / 4 | $3,000.00 | 50.0% | $6,000.00 | $3,000.00 | $750.00 |
When the declining method leaves a remainder
The $12,000 asset with zero salvage and a 4-year life shows the limit of the formula: after four years of 50% charges, $750.00 of book value remains. The cap against salvage only prevents the balance from going below the floor, so it does nothing here. In the $80,000 case the cap does bite, ending exactly at the $10,000 salvage. The tool reports end-of-life book value so that this difference is visible.
What the numbers represent
Depreciation is an accounting allocation of cost over time. It is not a cash payment and not a market valuation. The output reflects the two formulas applied to your inputs, with no tax rules, no part-year conventions and no impairment. For a statutory schedule or an unusual asset, use the figures here only as a cross-check.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →