Depreciation Calculator

The depreciation calculator builds an annual schedule for a depreciable asset. Enter asset cost, salvage value, useful life, and a method. The result shows total depreciation, ending book value, useful life, and a year-by-year schedule. For declining balance, the form can use double-declining depreciation or a custom annual rate.

This page focuses on a full schedule over the asset’s useful life. If you only need depreciation recorded so far, use the accumulated depreciation calculator. If the asset is a vehicle and you want a market-value style first-year drop plus later compounding, use the car depreciation calculator. For household equipment and claims planning, the appliance depreciation calculator uses a simpler straight-line value estimate.

Inputs and calculation details

Asset cost must be greater than zero. Salvage value must be zero or more and cannot exceed cost. Useful life must be at least one year and no more than 100 years in the form. The calculator truncates useful life to a whole number, so 5.8 years is treated as 5 years. That detail matters when matching results to a spreadsheet.

The method choices are straight-line, declining balance, and sum-of-years. For declining balance, double-declining sets the rate to 2 divided by useful life. Custom rate uses the percentage entered in the rate field. The schedule stores each year’s depreciation and ending book value rounded to two decimals. Total depreciation is the sum of the rounded annual depreciation entries.

Straight-line formula

Straight-line depreciation spreads depreciable cost evenly across the useful life:

$\text{annual depreciation} = \frac{\text{asset cost} - \text{salvage value}}{\text{useful life}}$

Each year, book value is reduced by the same annual amount:

$\text{ending book value} = \text{beginning book value} - \text{annual depreciation}$

With a 10,000 asset, 1,000 salvage value, and 5-year life, annual depreciation is 1,800. The schedule records 1,800 each year and ends at 1,000.

Declining balance formula

Declining balance applies a rate to beginning book value:

$\text{depreciation} = \text{beginning book value} \times \text{rate}$

For double-declining balance, the rate is:

$\text{rate} = \frac{2}{\text{useful life}}$

The calculator includes a safeguard. If applying the declining-balance amount would reduce book value below salvage value, it reverses that amount and uses straight-line depreciation over the remaining years instead:

$\text{straight-line switch amount} = \frac{\text{beginning book value} - \text{salvage value}}{\text{remaining years}}$

That switch is why the final book value respects salvage value instead of falling below it.

Sum-of-years formula

Sum-of-years is another accelerated method. First calculate the denominator:

$\text{sum of years} = \frac{\text{useful life} \times (\text{useful life} + 1)}{2}$

Each year uses a declining fraction:

$\text{depreciation} = (\text{asset cost} - \text{salvage value}) \times \frac{\text{life} - \text{year} + 1}{\text{sum of years}}$

Year one receives the largest fraction, and the final year receives the smallest.

Example: straight-line depreciation

Use the default straight-line inputs: asset cost 10,000, salvage value 1,000, and useful life 5 years. Depreciable cost is 9,000. Annual depreciation is 9,000 divided by 5, or 1,800. The schedule is:

Total depreciation is the sum of the schedule, or 9,000.00. Ending book value is 1,000.00.

For double-declining with the same cost, salvage, and life, the rate is 2 divided by 5, or 40%. Year one depreciation is 10,000 · 40%, or 4,000, leaving 6,000. Year two is 6,000 · 40%, or 2,400, leaving 3,600. Later years are checked against the salvage floor, and the calculator switches to a straight-line amount when needed.

When to use each method

Straight-line is easiest to audit and works well when the asset provides steady service. Declining balance is useful for assets that lose more value or usefulness early, such as technology, specialized equipment, or vehicles. Sum-of-years also accelerates depreciation but follows a fixed fraction pattern instead of applying a constant rate to book value.

For official books, use the method required by your accounting policy. For taxes, do not assume this schedule matches allowed deductions. IRS rules can require specific recovery periods and conventions. For budgeting, the schedule helps estimate when book value will approach salvage value and when replacement planning should begin.

When comparing methods, keep the total depreciable cost in mind. Straight-line, sum-of-years, and the declining-balance schedule with its salvage safeguard all aim to allocate the same cost minus salvage value over the asset’s life. The difference is timing. Earlier expense recognition can make early-period profit look lower and later-period profit look higher, even though cash paid for the asset may have occurred at purchase.

Sources

• IAS 16 Property, Plant and Equipment — current summary accessed 2026-07-09; Depreciable amount, useful life, residual value, method and review requirements; tax depreciation is out of scope.
• Calculation scope: The equations and assumptions described above are applied only to values entered in the form. No live rates, prices, tax rules, lender terms, or accounting classifications are fetched. Results are user scenarios, not quotes or prescribed classifications.