acalculator

What is the depreciation each year?

Enter what an asset cost, what it will be worth at the end, and how many years you will use it. Pick a method to see the depreciation and book value for every year.

Your numbers

Method
Depreciation in year 1
$9,600.00

A $58,000.00 asset with a $10,000.00 salvage value over 5 years depreciates $9,600.00 in year 1.

Total depreciation
$48,000.00
Yearly rate
20%
Book value at the end
$10,000.00
Years
5

Depreciation in year 1: $9,600.00. A $58,000.00 asset with a $10,000.00 salvage value over 5 years depreciates $9,600.00 in year 1.

How much is written off each year?

How does the book value fall?

What does each year look like?

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Builds a yearly depreciation schedule by the straight-line, declining balance (double declining) or sum-of-the-years’ digits method from the cost, salvage value and useful life.

Example with the default inputs (Cost of the asset $58,000.00, Salvage value $10,000.00, Useful life in years 5, Method Straight-line): A $58,000.00 asset with a $10,000.00 salvage value over 5 years depreciates $9,600.00 in year 1.

Method: Straight-line: (cost − salvage) ÷ life each year. Declining balance: book value × factor ÷ life, never below salvage, and the last year down to salvage. Sum of the years’ digits: (cost − salvage) × years left ÷ (life × (life + 1) ÷ 2).

  • Full years only: the asset is used from the start of year 1, with no part-year or mid-month convention.
  • This is book (accounting) depreciation. US tax depreciation for most property uses MACRS tables, which are not included.
  • Arithmetic is exact on the typed decimals; money shows to the cent and the rate to 2 decimals, halves up.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Cost of the asset $58,000.00, Salvage value $10,000.00, Useful life in years 5, Method Straight-line gives Depreciation in year 1 $9,600.00, Total depreciation $48,000.00, Yearly rate 20%, Book value at the end $10,000.00.Source: OpenStax, Principles of Financial Accounting, section 11.3, Kenzie Company printing press (https://openstax.org/books/principles-financial-accounting/pages/11-3-explain-and-apply-depreciation-methods-to-allocate-capitalized-costs): (58,000 − 10,000) ÷ 5 = 9,600 a year
  2. Cost of the asset $58,000.00, Salvage value $10,000.00, Useful life in years 5, Method Declining balance, Declining balance factor 200% gives Depreciation in year 1 $23,200.00, Yearly rate 40%, Book value at the end $10,000.00.Source: OpenStax, Principles of Financial Accounting, section 11.3, Kenzie Company printing press (https://openstax.org/books/principles-financial-accounting/pages/11-3-explain-and-apply-depreciation-methods-to-allocate-capitalized-costs): 58,000 × 40% = 23,200
  3. Cost of the asset $100,000.00, Salvage value $0.00, Useful life in years 5, Method Sum of years’ digits gives Depreciation in year 1 $33,333.33, Total depreciation $100,000.00, Book value at the end $0.00.Source: AccountingTools, "Sum of the years’ digits depreciation", Pensive Corporation example (https://www.accountingtools.com/articles/sum-of-the-years-digits-depreciation): 100,000 × 5 ÷ 15 = 33,333 (rounded there to the dollar)
  4. Cost of the asset $100,000.00, Salvage value $10,000.00, Useful life in years 4, Method Declining balance, Declining balance factor 200% gives Depreciation in year 1 $50,000.00, Yearly rate 50%, Book value at the end $10,000.00.Source: Principlesofaccounting.com, chapter 10, "Depreciation methods": double-declining balance stops at the salvage value (https://www.principlesofaccounting.com/chapter-10/depreciation-methods/): 50,000, 25,000, 12,500, then 2,500 (not 6,250) in year 4
  5. Cost of the asset $1,000.00, Salvage value $100.00, Useful life in years 3, Method Declining balance, Declining balance factor 150% gives Depreciation in year 1 $500.00, Yearly rate 50%, Book value at the end $100.00.Source: Principlesofaccounting.com, chapter 10, "Depreciation methods": double-declining balance stops at the salvage value (https://www.principlesofaccounting.com/chapter-10/depreciation-methods/)

How it works

With the cost C, the salvage value S, the useful life L in whole years, and the book value B at the start of each year (B = C in year 1), the depreciation for year y (1 to L) is:

  • Straight-line: (C − S) ÷ L every year.
  • Declining balance with factor f (200% for double declining, 150% for 1.5 times): B × f ÷ 100 ÷ L, but never more than B − S, so the book value never falls below the salvage value. In the last year (y = L) the depreciation is B − S, so the book value ends at exactly the salvage value. Once the book value reaches the salvage value, later years are $0.
  • Sum of the years’ digits: (C − S) × (L − y + 1) ÷ (L × (L + 1) ÷ 2).

After each year, B falls by that year’s depreciation. Accumulated depreciation is C − B.

The results:

  • Depreciation in year 1 is the first row’s depreciation.
  • Total depreciation is C − S.
  • Yearly rate is 100 ÷ L for straight-line (a percent of C − S) and f ÷ L for declining balance (a percent of the book value), rounded to 2 decimals, halves up. It is not shown for sum of the years’ digits.
  • Book value at the end is the book value after year L, which is S.

Rules:

  • The cost is more than $0 and at most $1 trillion. The salvage value is $0 to $1 trillion and not more than the cost; more than the cost has no answer. The life is a whole number of years from 1 to 50. The factor is 100% to 400%.
  • The arithmetic is exact: the book value is carried as an exact fraction from year to year. Money shows to the cent with halves rounded up (away from 0).

Assumptions

  • Full years only: the asset is used from the start of year 1. There is no part-year, half-year or mid-month convention.
  • Declining balance does not switch to straight-line; it takes whatever is left down to the salvage value in the last year.
  • This is book depreciation, not MACRS tax depreciation.

Worked examples by hand

$58,000 press, $10,000 salvage, 5 years, straight-line. (58,000 − 10,000) ÷ 5 = $9,600 a year; the rate is 100 ÷ 5 = 20%; the book value ends at $10,000.

The same press, double declining balance. The rate is 200 ÷ 5 = 40%. Year 1: 58,000 × 40% = $23,200 (book $34,800). Year 2: 34,800 × 40% = $13,920 (book $20,880). Year 3: 20,880 × 40% = $8,352 (book $12,528). Year 4: 40% would be $5,011.20, more than the $2,528 left above salvage, so $2,528 (book $10,000). Year 5: $0.

$100,000, no salvage, 5 years, sum of the years’ digits. The digits add to 15. Year 1: 100,000 × 5 ÷ 15 = 33,333.333…, shown as $33,333.33; then $26,666.67, $20,000, $13,333.33 and $6,666.67.

$100,000, $10,000 salvage, 4 years, double declining. 50%: $50,000, $25,000, $12,500; year 4 is the last year, so it takes 12,500 − 10,000 = $2,500.

$1,000, $100 salvage, 3 years, 150% declining balance. The rate is 150 ÷ 3 = 50%. Year 1: $500. Year 2: $250. Year 3 (the last): 250 − 100 = $150, ending at $100.

Other questions people ask

How do I calculate straight-line depreciation?

Subtract the salvage value from the cost and divide by the useful life. A $58,000 printing press worth $10,000 after 5 years depreciates (58,000 − 10,000) ÷ 5 = $9,600 a year.

How does double declining balance work?

Each year, multiply the book value at the start of the year by 2 ÷ the useful life. For a 5-year life that is 40%: $58,000 × 40% = $23,200 in year 1, then 40% of the $34,800 left, and so on. Depreciation stops when the book value reaches the salvage value.

What is sum-of-the-years’ digits?

Add the year numbers of the life (5 + 4 + 3 + 2 + 1 = 15 for 5 years). Year 1 takes 5/15 of the cost minus salvage, year 2 takes 4/15, down to 1/15 in the last year. $100,000 with no salvage gives $33,333.33 in year 1.

Which method should I use?

Straight-line spreads the cost evenly and is the simplest. Declining balance and sum-of-the-years’ digits write off more in the early years, which suits assets that lose value fast or are used most when new. Your accountant or your company’s policy decides for your books.

Is this the depreciation I claim on my taxes?

Usually not. US tax depreciation for most business property uses MACRS, with IRS tables, recovery periods and conventions such as the half-year convention. This calculator shows book depreciation by the three classic methods. See IRS Publication 946 for tax depreciation.

What is book value?

The cost minus all the depreciation so far. At the end of the useful life it equals the salvage value.

What if the salvage value is more than the cost?

There is nothing to depreciate, and the calculator gives a message instead of a schedule. A salvage value equal to the cost gives $0 every year.