Depreciation Calculator
Calculate asset depreciation using straight line, declining balance, and sum of the year’s digits methods
About Depreciation
Depreciation is the accounting process of allocating the cost of tangible assets over their useful lives. This calculator supports three common depreciation methods and can calculate partial-year depreciation with any accounting year date setting.
Tip: For double declining balance method, select “Declining Balance” and set the depreciation factor to 2.
Asset Information
Depreciation Settings
Depreciation Schedule
Total Depreciation
Annual Depreciation
Book Value End
| Year | Beginning Value | Depreciation | Accumulated Depreciation | Ending Value |
|---|---|---|---|---|
| 2023 | $10,000.00 | $2,000.00 | $2,000.00 | $8,000.00 |
| 2024 | $8,000.00 | $2,000.00 | $4,000.00 | $6,000.00 |
| 2025 | $6,000.00 | $2,000.00 | $6,000.00 | $4,000.00 |
| 2026 | $4,000.00 | $2,000.00 | $8,000.00 | $2,000.00 |
| 2027 | $2,000.00 | $1,000.00 | $9,000.00 | $1,000.00 |
About Straight Line Depreciation
The straight-line method is the simplest and most commonly used way to calculate depreciation. It allocates an equal amount of depreciation each year over the asset’s useful life.
Formula: (Cost – Salvage Value) / Useful Life
Understanding Depreciation Methods
Why Calculate Depreciation?
Depreciation is a fundamental accounting concept that helps businesses:
- Accurately report asset values on financial statements
- Allocate asset costs over their useful lives
- Reduce taxable income through depreciation expenses
- Plan for asset replacement and capital expenditures
- Comply with accounting standards and tax regulations
Depreciation Methods Explained
Straight Line Depreciation: The simplest method that allocates equal depreciation expense each year.
Declining Balance Depreciation: An accelerated method that applies a constant depreciation rate to the reducing book value each year.
Sum of the Year’s Digits Depreciation: Another accelerated method that uses a fraction based on the sum of the years’ digits.
When to Use Each Method
- Straight Line: Best for assets that lose value evenly over time (e.g., buildings, furniture)
- Declining Balance: Ideal for assets that lose more value in early years (e.g., vehicles, technology)
- Sum of the Year’s Digits: Suitable for tax purposes when you want to front-load depreciation expenses
Factors Affecting Depreciation
- Asset Cost: The original purchase price including taxes, delivery, and installation
- Salvage Value: Estimated residual value at the end of the asset’s useful life
- Useful Life: The period over which the asset is expected to be productive
- Depreciation Method: The accounting approach used to allocate costs
- Depreciation Rate: The percentage at which the asset depreciates each year