Depreciation Calculator

The Depreciation Calculator helps you estimate how much value an asset loses over time using popular accounting methods — Straight Line, Declining Balance, Double Declining Balance, and Sum of the Years’ Digits (SYD). It can also compute partial-year depreciation for assets purchased or placed into service partway through an accounting year.

Simply enter the asset’s cost, salvage value, and useful life, then choose your preferred depreciation method to calculate annual expense and remaining book value.

Understanding Depreciation

Depreciation represents the gradual reduction in an asset’s value due to usage, wear and tear, aging, or obsolescence. For example, a company vehicle loses value with every mile driven, and machinery becomes less efficient over time.

From an accounting perspective, depreciation spreads the cost of an asset over its useful life rather than recording the full expense in the year it was purchased. This provides a more accurate view of profits and expenses across multiple years.

Depreciation expenses are also tax-deductible for most businesses, helping to lower taxable income over time.

Common Methods of Depreciation

There are several ways to calculate depreciation, depending on the nature of the asset and how it’s used. While the total depreciation over the asset’s lifetime remains the same, the timing and pattern of expense recognition differ.

Straight-Line Depreciation

This is the simplest and most commonly used method. It allocates the asset’s cost evenly over its useful life.

Formula: Depreciation per year=Asset Cost−Salvage ValueUseful Life (Years)\text{Depreciation per year} = \frac{\text{Asset Cost} – \text{Salvage Value}}{\text{Useful Life (Years)}}Depreciation per year=Useful Life (Years)Asset Cost−Salvage Value​

Each year, the same amount of depreciation is charged until the asset’s value reaches its salvage (residual) value.

Declining Balance Method

This method applies a constant depreciation rate to the book value of the asset each year, resulting in higher depreciation expenses in earlier years and smaller ones later.

Formula: Depreciation per year=Book Value×Depreciation Rate\text{Depreciation per year} = \text{Book Value} \times \text{Depreciation Rate}Depreciation per year=Book Value×Depreciation Rate

It’s useful for assets that lose value quickly or generate more productivity when new — such as computers, vehicles, or manufacturing equipment.

Double Declining Balance (DDB)

The Double Declining Balance method is a variation of the declining balance method that uses twice the straight-line rate.

Example:
If the straight-line rate is 20%, the DDB rate will be 40%.

This method accelerates depreciation in the early years but stops when the book value equals the salvage value.

Sum of the Years’ Digits (SYD)

The SYD method also accelerates depreciation. It assigns a decreasing fraction of the depreciable base each year, with higher depreciation early in the asset’s life.

Formula: Depreciation for the Year=(Asset Cost−Salvage Value)×Remaining LifeSum of the Years’ Digits\text{Depreciation for the Year} = (\text{Asset Cost} – \text{Salvage Value}) \times \frac{\text{Remaining Life}}{\text{Sum of the Years’ Digits}}Depreciation for the Year=(Asset Cost−Salvage Value)×Sum of the Years’ DigitsRemaining Life​

Example: For an asset with a 5-year life, the sum of digits is 1+2+3+4+5 = 15.
The first year’s fraction would be 5/15, the second 4/15, and so on.

This approach is often used for assets that provide more output or utility in their early years.

Units of Production Method

This method ties depreciation directly to usage or output rather than time. It’s ideal for manufacturing equipment or vehicles where usage varies yearly.

Formula: Depreciation per year=(Asset Cost−Salvage Value)×Units ProducedTotal Estimated Units Over Life\text{Depreciation per year} = \frac{(\text{Asset Cost} – \text{Salvage Value}) \times \text{Units Produced}}{\text{Total Estimated Units Over Life}}Depreciation per year=Total Estimated Units Over Life(Asset Cost−Salvage Value)×Units Produced​

Partial-Year Depreciation

When an asset is purchased partway through a fiscal year, you may need to calculate partial-year depreciation. This ensures depreciation begins exactly when the asset enters service.

You can enable this option in the calculator by selecting “Yes” for partial-year depreciation and setting the start date accordingly.

Salvage Value

Salvage value (also called residual value or scrap value) is the estimated amount the asset will be worth at the end of its useful life. It represents what the company could sell the asset for after full depreciation — for example, machinery scrap value or a used car resale price.

If there’s no salvage value, the total depreciation equals the asset’s full cost.

Why Use This Calculator

✔ Instantly compute annual depreciation using multiple accounting methods.
✔ Compare how straight-line vs. accelerated methods affect profits.
✔ Account for partial-year assets and salvage value.
✔ Get clear year-by-year depreciation schedules for reporting or planning.

Example

If you buy equipment for $11,000, expect a $1,000 salvage value after 5 years, and use the Straight-Line method, your annual depreciation will be: (11,000−1,000)5=$2,000 per year\frac{(11,000 – 1,000)}{5} = \$2,000 \text{ per year}5(11,000−1,000)​=$2,000 per year

At the end of five years, the book value of the equipment will be $1,000 — its salvage value.

Disclaimer

This tool provides estimated results for informational and educational purposes only. Actual depreciation may vary depending on tax regulations, accounting policies, and business circumstances. Always consult a financial professional or accountant for official calculations.