Depreciation Calculator
This depreciation calculator shows how much a business asset depreciates in a given year, comparing the straight-line method (even, predictable) against double-declining balance (front-loaded). Enter your asset details to see the depreciation and remaining book value.
The full purchase price of the asset.
What the asset is expected to be worth at the end of its useful life.
The number of years the asset is expected to be in service.
Which year of the asset's life to show depreciation for.
Straight-line spreads the cost evenly; double-declining balance front-loads it.
Depreciation this year
$4,500
How to use this depreciation calculator
- 1Asset cost, salvage value and useful life: the basics of the depreciation schedule.
- 2Year to calculate: which year of the asset's life you want to see the figures for.
- 3Method: straight-line spreads the cost evenly every year; double-declining balance depreciates faster in early years and slower later — commonly used for tax purposes on assets that lose value quickly.
Understanding your results
Depreciation this year is the expense recognized for the selected year — constant every year under straight-line, larger in early years and shrinking under declining balance. Book value at end of year is what the asset is still 'worth' on the books after accumulated depreciation — this converges to the salvage value by the end of the useful life under either method.
The formula
Straight-line = (Cost − Salvage) ÷ Life · Declining balance = Book value × (2 ÷ Life)Straight-line depreciation simply spreads the total depreciable amount (cost minus salvage value) evenly across every year of useful life. Double-declining balance instead applies a fixed rate (double the straight-line rate) to the asset's remaining book value each year — since the book value shrinks every year, so does the dollar amount of depreciation, without ever going below the salvage value floor.
A worked example
A $50,000 asset with a $5,000 salvage value and 10-year useful life: straight-line depreciation is a flat $4,500/year, every year. Double-declining balance depreciates $10,000 in year one (20% of $50,000), then a shrinking amount each following year as the book value declines — front-loading the expense compared to straight-line.
Notes for the UK, US and India
Businesses often use accelerated methods like double-declining balance for tax purposes (bigger deductions sooner) while using straight-line for financial reporting to shareholders — the two methods can legitimately differ between a company's tax return and its published financial statements.
Frequently asked questions
Which method should I use?+
It depends on the purpose — straight-line is simpler and often required or preferred for financial reporting; accelerated methods like double-declining balance are common for tax purposes since they front-load deductions. Consult your accountant for what's appropriate in your jurisdiction and asset type.
Does depreciation affect cash flow?+
No — depreciation is a non-cash accounting expense. It reduces reported profit (and therefore taxable income) but doesn't involve any actual cash leaving the business in the year it's recorded.
What happens after the useful life ends?+
The asset's book value should be at (or near) its salvage value and generally isn't depreciated further, even if it remains in service — though it may still have real market or scrap value beyond its accounting book value.
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