Depreciation Calculator
Calculate asset depreciation using straight-line, declining balance, or sum-of-years digits methods. See annual depreciation amounts and book value over time.
Frequently Asked Questions
Salvage value is the estimated value of an asset at the end of its useful life. You only depreciate cost minus salvage value.
Straight-line is simplest. Declining balance and DDB front-load depreciation, reducing taxable income more in early years. Consult a tax professional for your specific situation.
What depreciation measures
Depreciation spreads the cost of an asset across the years you actually use it, rather than recording the whole expense in the year you bought it. A delivery van used for six years contributes to six years of revenue, so its cost is matched against those six years.
Straight-line depreciation
Example: equipment costing $25,000, expected to be worth $5,000 after 5 years.
($25,000 − $5,000) ÷ 5 = $4,000 per year
Book value drops by $4,000 annually: $21,000 after year one, $17,000 after year two, down to $5,000 at the end of year five. Straight-line is the most common method because it is simple and predictable.
Declining balance
Accelerated methods front-load the expense, which better reflects assets that lose most of their value early — vehicles and computers especially.
Double-declining balance applies twice the straight-line rate to the remaining book value each year. On a 5-year asset the straight-line rate is 20%, so double-declining uses 40%:
- Year 1: $25,000 × 40% = $10,000
- Year 2: $15,000 × 40% = $6,000
- Year 3: $9,000 × 40% = $3,600
Depreciation stops once book value reaches salvage value — you never write an asset below what it's worth.
Key terms
- Salvage value — what you expect the asset to be worth at the end of its useful life. Can be zero.
- Useful life — how long you expect to use it, in years.
- Book value — original cost minus all depreciation recorded so far.
One important caveat: depreciation for your own accounts and depreciation for tax purposes are often calculated differently. Many tax systems prescribe their own schedules and asset classes. Use this for planning and book value estimates, and follow your tax authority's rules — or your accountant's advice — for a return.