📉 Depreciation Calculator
Calculate asset depreciation
How to Use This Calculator
Enter Asset Information
Input the asset cost (purchase price), salvage value (residual value at end of useful life, if any), and useful life in years.
Select Depreciation Method
Choose a depreciation method: Straight-Line (equal annual depreciation), Double Declining Balance (accelerated), or Sum-of-Years Digits (accelerated but smooth).
Review Depreciation Schedule
See the annual depreciation expense, cumulative depreciation, and book value for each year. Use this for tax planning, financial statements, and asset valuation.
Formula
Straight-Line: Annual Depreciation = (Cost - Salvage Value) / Useful Life
Double Declining Balance: Depreciation = Book Value × (2 / Useful Life)
Sum-of-Years Digits: Depreciation = (Cost - Salvage) × (Remaining Life / Sum of Years)
Example Calculation (Straight-Line):
If cost $50,000, salvage $5,000, useful life 5 years:
• Depreciable value = $50,000 - $5,000 = $45,000
• Annual depreciation = $45,000 / 5 = $9,000/year
About Depreciation Calculator
A depreciation calculator helps you calculate the annual depreciation expense for assets over their useful life. Depreciation allocates the cost of an asset over its useful life, reflecting the asset's declining value. This calculator supports multiple depreciation methods: Straight-Line (equal annual depreciation), Double Declining Balance (accelerated depreciation), and Sum-of-Years Digits (accelerated but smooth). Depreciation is important for tax purposes, financial statements, and asset valuation.
When to Use This Calculator
- Tax Planning: Calculate depreciation for tax deductions
- Financial Statements: Calculate depreciation for financial reporting
- Asset Valuation: Determine asset book value over time
- Business Planning: Plan for asset depreciation and replacement
Understanding Depreciation Methods
- Straight-Line: Equal annual depreciation (most common, simple)
- Double Declining Balance: Accelerated depreciation (higher early years)
- Sum-of-Years Digits: Accelerated but smooth (balance between methods)
- Tax Rules: IRS has specific rules for depreciation methods
Why Use Our Calculator?
- ✅ Depreciation Calculation: Calculate depreciation accurately
- ✅ Multiple Methods: Support for different depreciation methods
- ✅ Tax Planning: Calculate depreciation for tax purposes
- ✅ Financial Statements: Calculate depreciation for financial reporting
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is depreciation?
Depreciation is the allocation of an asset's cost over its useful life, reflecting the asset's declining value. Depreciation allows businesses to expense the cost of assets over time rather than all at once, matching expenses with revenue. Depreciation is a non-cash expense that reduces taxable income and is used in financial statements and tax calculations.
What's the difference between depreciation methods?
Straight-line depreciation allocates cost equally over the useful life (simple and common). Double declining balance allocates more depreciation in early years (accelerated, higher tax deductions early). Sum-of-years digits also accelerates depreciation but more smoothly. Choose based on: (1) Tax strategy - accelerated methods provide higher early deductions, (2) Asset type - some assets depreciate faster, (3) Tax rules - IRS rules may require specific methods, (4) Financial reporting - GAAP may require specific methods.
How do I choose a depreciation method?
Choose based on: (1) Tax strategy - accelerated methods provide higher early tax deductions, (2) Asset type - assets that lose value quickly may benefit from accelerated methods, (3) Tax rules - IRS rules (like MACRS) may require specific methods, (4) Financial reporting - GAAP may require specific methods, (5) Business needs - consider cash flow and tax planning. Consult a tax professional for business assets, as tax rules can be complex.
Can I depreciate all assets?
Not all assets can be depreciated. Depreciable assets must: (1) Be used in business or income-producing activity, (2) Have a determinable useful life, (3) Lose value over time. Land is never depreciable. Personal assets don't qualify. Intangible assets may be amortized (similar to depreciation). Consult a tax professional for specific assets, as tax rules vary by asset type and use.