About the Depreciation Calculator
A depreciation calculator computes how an asset's value declines over its useful life, using straight-line and declining balance methods. Depreciation spreads a purchase cost across the years the asset is used, which is both an accounting requirement and a significant tax matter.
The formula
Straight-line: (cost − salvage) / life; Declining balance: book value · rateSalvage value is what the asset is expected to be worth at the end of its useful life. Declining balance applies a fixed percentage to the falling book value, front-loading the expense.
How to use this calculator
- 1Enter your Asset Cost ($). The field starts at
50000, which you can overwrite. - 2Enter your Salvage Value ($). The field starts at
5000, which you can overwrite. - 3Enter your Useful Life (Years). The field starts at
5, which you can overwrite. - 4Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Asset Cost ($) | 50000 |
| Salvage Value ($) | 5000 |
| Useful Life (Years) | 5 |
Result
Straight-Line:
Annual Depreciation: $9000.00
Rate: 18.00%
Book Value (Yr 1): $41000.00
Double Declining Balance:
Year 1 Depreciation: $20000.00
Year 1 Book Value: $30000.00
DB Rate: 40.00%
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Straight-line spreads the cost evenly, which suits assets that wear steadily such as buildings and furniture. Declining balance charges more in early years, which better matches assets losing value fastest when new — vehicles and computers are the classic cases. The total depreciation is the same; only its timing differs.
Timing matters for tax because a deduction taken sooner is worth more than the same deduction later. This is why accelerated methods and provisions like Section 179 expensing exist, and why businesses often choose different methods for tax purposes than for financial reporting.
Things worth knowing
- Land is never depreciated, only the buildings and improvements on it.
- US tax depreciation uses MACRS with prescribed recovery periods, which may differ from the useful life used in your accounts.
- Section 179 and bonus depreciation can allow immediate expensing of qualifying purchases.
- Depreciation is recaptured as ordinary income when an asset is sold above its book value.
- Book depreciation for financial statements and tax depreciation are commonly calculated differently.
Frequently asked questions
What is the difference between straight-line and declining balance?+
Straight-line spreads cost evenly across the useful life. Declining balance charges more in early years by applying a fixed rate to the falling book value, matching assets that lose value fastest when new.
What is salvage value?+
The estimated worth of an asset at the end of its useful life. It is subtracted from cost before depreciation is calculated, since you only depreciate the value actually consumed.
Which method should I use?+
Straight-line for steady-wearing assets like buildings, declining balance for those losing value quickly like vehicles and technology. For US tax purposes, MACRS prescribes the method and period.
What is depreciation recapture?+
Tax charged when you sell an asset for more than its depreciated book value. The excess up to the original cost is generally taxed as ordinary income rather than capital gain.