About the Depreciation Calculator

For business owners, accountants, and asset managers, calculating depreciation is critical for tax reporting and asset valuation. Our Depreciation Calculator is a professional-grade tool that supports the three most common depreciation schedules:Straight-Line, Double Declining Balance, and Sum of Years' Digits.

Depreciation represents the ongoing decline in value of an asset over time due to wear, tear, or obsolescence. Accurately tracking this helps in determining the "Book Value" of company assets and maximizing tax deductions.

How to Use This Calculator

• Depreciation Method: Select from Straight-Line (simplest), Double Declining (accelerated), or Sum of Years Digits (accelerated).
• Asset Cost: The original purchase price of the equipment, vehicle, or property (including setup/install fees).
• Salvage Value: The estimated resale value of the asset at the end of its useful life.
• Useful Life (Years): How long you expect to use the asset (e.g., 5 years for computers, 7 years for office furniture).

How the Calculation Works

Each method allocates the cost differently:

• Straight-Line: The expense is spread evenly.
  (Cost - Salvage) / Years
• Double Declining Balance: A heavy portion of the value is written off in the first few years. This is useful for assets that lose value quickly, like cars or tech hardware.
  Rate = 2 / Life_in_Years applied to the beginning book value each year.

Understanding Your Results

The calculator delivers a precise snapshot for Year 1, which is usually the most relevant for immediate tax planning.

Year 1 Depreciation: The immediate deduction you can take for the first year.
Total Depreciation: The total value the asset will lose over its entire life (Cost minus Salvage Value).
Remaining Book Value: What the asset is "worth" on your balance sheet after the depreciation is applied.

Practical Example

Asset: Delivery Van ($50,000).
Salvage: $5,000.
Life: 5 Years.

Straight-Line: Depreciation is $9,000/year ($45k / 5). Consistent and predictable.
Double Declining: Year 1 Depreciation is $20,000 (40% of $50k). This creates a massive tax shield in the first year but lower deductions in years 4 and 5.

When and Why This Calculator Is Useful

Use this tool to:

• Maximize Tax Strategy: Decide if an accelerated method (Double Declining) benefits your cash flow more than Straight-Line.
• Asset Management: Determine the fair market value of used equipment before selling.
• Financial Reporting: Ensure your Balance Sheet accurately reflects the value of your capital assets.