Depreciation Calculator
Straight Line · Double Declining Balance · Sum-of-the-Years' Digits
| Year | Depreciation Expense | Accumulated Depreciation | Ending Book Value |
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What Is Depreciation?
Depreciation is the systematic allocation of an asset's cost over its useful life. It represents how much of an asset's value has been used up in a given period. Businesses use depreciation to match expenses with revenues and to reflect the declining value of tangible assets like machinery, vehicles, or equipment.
Straight-Line Depreciation
The simplest method: the asset loses an equal amount each year. The formula is:
(Cost – Salvage Value) ÷ Useful Life
Example: An asset costing $12,000 with a $2,000 salvage value and a 5-year life has an annual depreciation of ($12,000 – $2,000) ÷ 5 = $2,000.
Double Declining Balance Depreciation
An accelerated method that expenses more in the early years. It applies a constant rate (200% of the straight-line rate) to the asset's beginning book value each year. The rate is:
2 × (1 ÷ Useful Life)
Depreciation continues until the book value equals the salvage value. In later years, the expense is adjusted so the book value never drops below salvage.
Sum-of-the-Years' Digits (SYD)
Another accelerated method. First, add the digits of the useful life. For a 5‑year life, the sum is 5+4+3+2+1 = 15. Then each year’s fraction is (remaining life ÷ sum). Depreciation expense is:
(Cost – Salvage) × (Remaining Life ÷ Sum of Years)
Example: Year 1 fraction = 5/15, so depreciation = ($12,000 – $2,000) × 5/15 = $3,333.33.
How to Use This Calculator
- Enter the asset cost (purchase price).
- Enter the salvage value (estimated value at end of life).
- Enter the useful life in whole years (minimum 1).
- Choose a depreciation method from the dropdown.
- Click Calculate to see the year-by-year schedule.
The table shows each year’s depreciation expense, accumulated depreciation, and the ending book value. The summary confirms the total depreciation equals cost minus salvage.
Why Depreciation Matters
Depreciation affects net income, tax liability, and asset valuation. Choosing the right method can significantly impact financial statements. Accelerated methods like double declining balance and SYD reduce taxable income in early years, while straight-line provides consistency. Our free depreciation calculator helps you compare these methods instantly.
