Depreciation Summary
| Year | Depreciation | Accumulated | Book Value |
|---|
What is a depreciation calculator?
A Depreciation Calculator spreads the cost of an asset, such as a vehicle, machine, computer or furniture, over its useful life and shows the book value at the end of each year. It supports three common accounting methods: straight-line, declining balance (including double declining balance) and sum-of-the-years’-digits. It is useful for small business owners, students and anyone estimating how an asset’s value falls on paper.
How to use it
- Enter the asset cost, its expected salvage value at the end and its useful life in years.
- Choose a depreciation method. For declining balance, pick the rate multiplier (2× is double declining balance).
- Click Calculate to see the depreciable amount, first-year depreciation and a full schedule.
Depreciation formulas
Straight-line: Annual depreciation = (Cost − Salvage) ÷ Useful life
Declining balance: Depreciation = Book value at start of year × (Multiplier ÷ Useful life), never taking book value below salvage value
Sum-of-the-years’-digits: Depreciation = (Cost − Salvage) × Remaining life ÷ (1 + 2 + … + Useful life)
Book value = Cost − Accumulated depreciation
Example
An asset costs $20,000, has a $2,000 salvage value and a 5-year life, so $18,000 is depreciated in total.
| Year | Straight-line | Double declining | Sum-of-years’-digits |
|---|---|---|---|
| 1 | $3,600 | $8,000 | $6,000 |
| 2 | $3,600 | $4,800 | $4,800 |
| 3 | $3,600 | $2,880 | $3,600 |
| 4 | $3,600 | $1,728 | $2,400 |
| 5 | $3,600 | $592 | $1,200 |
All three methods end at the same $2,000 book value; they differ in how quickly the cost is recognized.
Accounting depreciation vs. market value
This calculator follows accounting methods, which spread an asset’s cost in a fixed pattern. A car’s resale value, by contrast, depends on age, mileage, condition and demand, and often falls fastest in the first few years. Use the declining balance method if you want a rough picture of that front-loaded drop.
Tax depreciation
For US federal taxes, most business property is depreciated under the IRS Modified Accelerated Cost Recovery System (MACRS), with set recovery periods and conventions, and residential rental buildings are generally depreciated over 27.5 years. This calculator does not apply MACRS tables or conventions, so use it for planning and learning, and see IRS Publication 946 or a tax professional for tax returns.
Tips
- Choose a realistic useful life; it has a big effect on the yearly figure.
- Keep salvage value conservative.
- Use the same method consistently for similar assets.
- Land is not depreciated; only buildings and improvements are.
Frequently Asked Questions
Depreciation is the reduction in an asset’s value over time. It can result from use, aging, wear and tear, obsolescence, or changes in market value.
With the straight-line method, subtract the salvage value from the cost and divide by the useful life. A $20,000 asset with a $2,000 salvage value and a 5-year life depreciates $3,600 a year.
Straight-line is simplest and most common in financial statements. Declining balance and sum-of-the-years’-digits recognize more cost early, which suits assets that lose value or usefulness quickly. For tax returns, follow the IRS rules for your asset.
Yes, but rental property depreciation involves specific tax rules. A calculator can provide an estimate, while the actual tax treatment should be determined according to applicable regulations.
Yes. Enter the equipment’s purchase cost, estimated salvage value, useful life, and applicable depreciation method to estimate depreciation.
Disclaimer: This calculator gives estimates for general information only. It is not financial, tax or legal advice. Results depend on the numbers you enter and on simplified assumptions, so your actual figures may differ. Check important decisions with a qualified professional or the official source.
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