Depreciation Calculator
Depreciation Schedule
| Year↕ | Depreciation↕ | Book Value↕ |
|---|---|---|
| 1 | $9,000.00 | $41,000.00 |
| 2 | $9,000.00 | $32,000.00 |
| 3 | $9,000.00 | $23,000.00 |
| 4 | $9,000.00 | $14,000.00 |
| 5 | $9,000.00 | $5,000.00 |
Depreciation spreads the cost of a business asset across the years it is used, and the method you pick changes how quickly that expense lands. This calculator builds a full year-by-year schedule using one of three classic methods — straight-line, double-declining balance, or sum-of-the-years’-digits — showing each year’s depreciation and the asset’s remaining book value. All three depreciate down toward the salvage value you set and never below it.
Formula
Straight-line: (Cost − Salvage) / Life; Declining: BookValue × (2 / Life); SYD: (Cost − Salvage) × (remaining / Σdigits)
- Cost
- Original purchase price of the asset
- Salvage
- Estimated residual value at end of useful life (the book-value floor)
- Life
- Useful life in years
- Σdigits
- Sum of the year digits = Life × (Life + 1) / 2, used by the SYD method
How it works
- Enter the asset’s purchase cost, its expected salvage value at the end of its life, and its useful life in years.
- Choose a method: straight-line spreads the depreciable base evenly; declining balance applies a fixed 2/life rate to the shrinking book value; sum-of-years weights early years more heavily by the fraction (remaining life ÷ sum of the year digits).
- The calculator generates a schedule listing each year’s depreciation and resulting book value, clamping book value at the salvage floor, and reports the first-year depreciation up top.
Worked example
An asset costing $50,000 with a $5,000 salvage value over a 5-year life, using straight-line depreciation.
- Depreciable base: 50,000 − 5,000 = $45,000.
- Annual depreciation: 45,000 ÷ 5 = $9,000 each year.
- Book value falls 50,000 → 41,000 → 32,000 → 23,000 → 14,000 → 5,000 (the salvage floor) by year 5.
Straight-line gives $9,000 of depreciation every year. By contrast, double-declining balance would expense $20,000 in year 1 and $12,000 in year 2, front-loading the deduction.
Frequently asked questions
- Which depreciation methods does this calculator support?
- It supports straight-line, double-declining balance (a 2/life rate on the remaining book value), and sum-of-the-years’-digits. It does not compute IRS MACRS tables, which use prescribed percentages by asset class.
- What is the difference between straight-line and declining balance?
- Straight-line expenses the same amount every year, while double-declining balance front-loads depreciation, taking larger deductions early and smaller ones later. Both stop once the book value reaches the salvage value.
- Why does the book value never drop below salvage value?
- Salvage value is the estimated worth at the end of the asset’s life, so depreciation only reduces value down to that floor. The calculator caps each year’s book value at the salvage amount and trims the final year’s depreciation if needed.
- How does sum-of-the-years’-digits work?
- It also accelerates depreciation but more gently than declining balance. Each year’s share of the depreciable base is the remaining life over the sum of the year digits — for a 5-year asset that is 5/15, 4/15, 3/15, 2/15, then 1/15.