Depreciation spreads an asset’s cost over its useful life. Accelerated methods (declining balance, SYD) give bigger deductions early. For U.S. taxes, most assets use MACRS rather than these book methods.
How to use the Depreciation Calculator
- Depreciation method
- Asset cost
- Salvage value
- Useful life
- Year
- Declining balance factor
- Total units over life
- Units this year
- Units to date (incl. this year)
Results update as you type, and every field accepts the units shown in its menu.
How it works
Choose the method, enter the cost, salvage value and useful life, the year to look at, and the factor or units where needed.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Depreciation method | Choose one: Straight line, Declining balance, Sum of the years’ digits, Units of production |
| Asset cost | Amount in your currency |
| Salvage value | Amount in your currency |
| Useful life | In years |
| Year | A number |
| Declining balance factor | In % |
| Total units over life | A number |
| Units this year | A number |
| Units to date (incl. this year) | A number |
What each result means
- Book value at year end = [Asset cost] – [Accumulated depreciation]
- Depreciation rate = [Depreciation in the year]÷[Asset cost]×100
Example values
How the main result changes when Asset cost changes and everything else stays at the example values above:
| Asset cost | Depreciation in the year |
|---|---|
| 25,000 | 4,000 |
| 37,500 | 6,500 |
| 50,000 | 9,000 |
| 62,500 | 11,500 |
| 75,000 | 14,000 |
| 100,000 | 19,000 |
Formula
Straight line: (cost − salvage) ÷ lifeDeclining balance: book value × factor ÷ life (not below salvage)Sum of years' digits: (cost − salvage) × remaining life ÷ (n(n + 1) ÷ 2)Units of production: (cost − salvage) × units this year ÷ total unitsWorked example
Inputs — Depreciation method: Straight line; Asset cost: $50,000; Salvage value: $5,000; Useful life: 5 years; Year: 2; Declining balance factor: 200 %; Total units over life: 100,000; Units this year: 25,000; Units to date (incl. this year): 45,000.
Results — Depreciation in the year = $9,000.00; Accumulated depreciation = $18,000.00; Book value at year end = $32,000.00; Depreciation rate = 18 %.
Frequently asked questions
What is the most common depreciation method?
Straight line – the same amount every year.
What is double-declining balance?
A declining balance method with a factor of 200% of the straight-line rate.
Can book value fall below salvage value?
No – depreciation stops at the salvage value.
What formula does the Depreciation Calculator use?
Straight line: (cost − salvage) ÷ life.