depreciation calculator

What is depreciation?

Depreciation is the process of allocating the cost of a long-term asset over the years it provides value. Instead of recording the entire purchase as an expense in year one, businesses spread that cost over the asset's useful life.

Common examples include vehicles, machinery, equipment, computers, and furniture. Depreciation helps produce clearer financial statements because expenses are matched with the revenue the asset helps generate.

How this depreciation calculator works

This calculator estimates an annual depreciation schedule based on four inputs:

• Asset cost: the purchase price (plus capitalizable costs if applicable).
• Salvage value: estimated value at the end of useful life.
• Useful life: number of years the asset is expected to be in service.
• Method: formula used to allocate depreciation across years.

The output includes yearly depreciation expense, accumulated depreciation, and ending book value.

Depreciation methods included

1) Straight-Line (SL)

Straight-line spreads depreciation evenly each year:

(Cost − Salvage) ÷ Useful Life

It is simple and widely used for financial reporting when asset usage is relatively consistent over time.

2) Double Declining Balance (DDB)

DDB is an accelerated method. It records larger depreciation in earlier years and smaller amounts later. The basic rate is 2 ÷ Useful Life, applied to beginning book value each year.

3) 150% Declining Balance

Similar to DDB but less aggressive. It uses a factor of 1.5 instead of 2. This can be useful when you want acceleration, but with a smoother decline.

4) Sum-of-the-Years'-Digits (SYD)

Another accelerated method based on a fraction that decreases each year. It front-loads depreciation but typically less aggressively than DDB.

How to use it effectively

• Use realistic salvage value assumptions.
• Choose useful life based on actual operational expectations.
• Compare methods to see timing differences in expense recognition.
• For declining methods, keep "switch to straight-line" enabled for a practical schedule.

Important tax and accounting note

This calculator is designed for planning and learning. Tax depreciation often follows jurisdiction-specific rules (for example, class lives, conventions, bonus depreciation, or MACRS in the U.S.). Financial statement depreciation may differ from tax depreciation. Always confirm assumptions with your accountant or tax advisor.

Common mistakes to avoid

• Setting salvage value greater than or equal to cost.
• Using fractional useful life when your policy requires whole years.
• Confusing book depreciation with cash outflow.
• Applying one method to all assets without considering usage patterns.

Bottom line

Depreciation affects profit, taxes, and decision-making. A clear depreciation schedule helps you forecast expenses, evaluate replacement timing, and communicate asset performance more confidently. Use this calculator to compare methods quickly and build a better planning model for your business or project.