Depreciation Calculator — Straight Line & Declining Balance
Straight-line, declining-balance and sum-of-years-digits schedules for an asset.
Depreciation Calculator
Straight-line depreciation
The simplest method: the same charge every year across the useful life.
annual depreciation = (cost − salvage value) ÷ useful life
- cost
- Purchase price plus any cost of bringing the asset into use
- salvage value
- Estimated resale value at the end of its useful life
- useful life
- Years the asset is expected to be in service
Worked example
- Cost
- 50,000
- Salvage value
- 5,000
- Useful life
- 5 years
- Depreciable amount
- 45,000
9,000 per year for 5 years
Choosing a method
| Method | Pattern | Best matches |
|---|---|---|
| Straight line | Equal each year | Assets that wear evenly: buildings, furniture, fixtures |
| Declining balance | Front-loaded — a fixed % of the reducing book value | Assets that lose most value early: vehicles, computers |
| Double declining | Steeply front-loaded | Technology with rapid obsolescence |
| Sum of years digits | Front-loaded, less steeply than declining balance | A middle ground |
| Units of production | Per unit produced or hour used | Machinery where wear tracks usage rather than time |
Accounting depreciation and tax depreciation are different systems and frequently use different methods and lives for the same asset. Many jurisdictions mandate specific capital allowance rules that override the accounting choice entirely.
About
The Depreciation Calculator computes how the value of a fixed asset decreases over its useful life, using either the straight-line (SL) or declining balance (DB) method. Enter the asset cost, salvage (residual) value, and useful life in years. For declining balance, also specify the annual depreciation rate. The tool generates a full year-by-year schedule showing the annual depreciation charge, accumulated depreciation to date, and remaining book value. Depreciation matters for financial statements (it reduces reported profit), tax planning (many jurisdictions allow accelerated depreciation for tax purposes), and budgeting for asset replacement.
How to use
- 1 Select the depreciation method: Straight-Line (SL) spreads cost evenly; Declining Balance (DB) front-loads depreciation.
- 2 Enter the asset cost — the original purchase price including installation and delivery.
- 3 Enter the salvage value — the estimated residual value at the end of useful life (use 0 if you expect to fully depreciate).
- 4 Enter the useful life in years.
- 5 For declining balance, enter the annual DB rate (common rates: 20% for 5-year assets, 33% for 3-year assets).
- 6 Review the depreciation schedule table showing each year's depreciation, accumulated total, and book value.
- What is the difference between straight-line and declining balance depreciation?
- Straight-line depreciation spreads the depreciable cost (asset cost minus salvage value) evenly over the useful life. Each year's charge is identical: (Cost − Salvage) ÷ Useful Life. Declining balance applies a fixed rate to the remaining book value each year, so depreciation is higher in early years and lower later. DB better reflects the reality that many assets lose value faster when new (cars, computers, machinery).
- What is the salvage value and how do I estimate it?
- Salvage value (also called residual value or scrap value) is the estimated amount you could recover from the asset at the end of its useful life — by selling it, trading it in, or scrapping it. For vehicles, check used-car market data. For equipment, manufacturer trade-in programmes may give guidance. For IT equipment, many businesses use $0 as salvage value since computers are often worthless after 3–5 years.
- What DB rate should I use?
- Common declining balance rates: 20% for 5-year assets (equivalent to 200% DB or double-declining balance when the straight-line rate is 20%), 33% for 3-year assets, 15% for 7-year assets. Many tax authorities publish specific rates for asset categories. The double-declining balance (DDB) rate is simply twice the straight-line rate — for a 5-year asset, the SL rate is 20%, so DDB is 40%.
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