This depreciation calculator computes annual depreciation and remaining book value for an asset using the two classic methods — straight-line and double-declining balance — with a year-by-year schedule.
| Year | Depreciation | Accumulated | Book value (end) |
|---|
Educational schedule. Tax depreciation (MACRS in the US, capital allowances elsewhere) follows statutory tables that differ from both methods shown — use those rules for filings.
What Is Depreciation?
Depreciation spreads an asset’s cost over the years it serves — matching the expense to the revenue it helps produce, and tracking its declining book value. A $50,000 machine with a 10-year life does not “cost” $50,000 in year one for accounting purposes; it costs a slice each year. Two allocation philosophies dominate, and this calculator (in our Finance Calculators collection) shows both:
- Straight-line: equal slices — (cost − salvage) ÷ life, every year.
- Double-declining balance: accelerated — a fixed percentage (2 ÷ life) of the remaining book value each year, front-loading the expense.
Worked Example (Verified)
$50,000 asset, $5,000 salvage, 10-year life:
- Straight-line: ($50,000 − $5,000) ÷ 10 = $4,500 every year; book value glides to $5,000.
- Double-declining (20% of remaining book): year 1 = $10,000, year 2 = $8,000, year 3 = $6,400… tapering until the salvage floor catches it in the final years.
- Total depreciation is identical ($45,000) — only its timing differs, which matters for taxes and reported profit, not for arithmetic.
Choosing a Method (Book vs. Tax)
- Financial reporting usually favors straight-line for its simplicity and evenness.
- Tax systems often mandate their own accelerated tables (US MACRS assigns recovery periods by asset class; bonus depreciation and Section 179 can expense much or all in year one). This calculator teaches the concepts; filings follow the statutory tables.
- Units-of-production (the third classic) ties depreciation to usage — miles, hours, units made — ideal for wear-driven assets; estimate it as (cost − salvage) × (period use ÷ lifetime use).
- Land never depreciates; buildings do (27.5 years residential, 39 commercial under MACRS). Vehicles, computers and machinery each have their own prescribed lives.
Related Tools
- Finance Calculators — the full collection
- Break-Even Calculator — where depreciation sits in fixed costs
Frequently Asked Questions
What is the straight-line depreciation formula?
(Cost − salvage value) ÷ useful life, charged equally each year. $50,000 cost, $5,000 salvage, 10 years → $4,500/year.
What is double-declining balance?
Depreciate 2/life of the remaining book value each year — double the straight-line rate, applied to a shrinking base, never below salvage value. It front-loads expenses in the early years.
What is salvage value?
The asset’s expected residual worth at the end of its useful life — scrap, resale or trade-in value. Only the cost above salvage gets depreciated.
Is depreciation a cash expense?
No — the cash left at purchase. Depreciation is the accounting allocation of that sunk cost, which is why it is added back in cash-flow statements (while still reducing taxable income).
What is book value?
Cost minus accumulated depreciation — the asset’s carrying value on the balance sheet, shown per year in the schedule above.
Is this depreciation calculator free?
Yes — free, instant, no sign-up. For tax filings, use the official MACRS or your jurisdiction’s capital-allowance tables.