Depreciation Calculator
Calculate depreciation for any asset using three common methods. Enter the asset cost, salvage value, useful life, and select a method to see the annual depreciation expense, accumulated depreciation, and remaining book value for any year.
Depreciation is the systematic allocation of an asset's cost over its useful life. It is a non-cash expense that reduces taxable income and reflects the gradual consumption of an asset's value. The three most common methods are straight-line, double declining balance, and sum-of-years-digits.
Straight-line depreciation is the simplest: (Cost - Salvage Value) / Useful Life. It allocates an equal expense each year. Double declining balance (DDB) is an accelerated method that uses a rate of 2/useful life applied to the remaining book value, resulting in higher depreciation in early years. Sum-of-years-digits (SYD) is another accelerated method where each year's depreciation is (Remaining Life / Sum of All Years) multiplied by the depreciable amount.
Accelerated methods like DDB and SYD front-load depreciation expense, which can be advantageous for tax planning by reducing taxable income in early years. Straight-line is simpler and produces more predictable expenses. The choice of method affects reported profits but not cash flow, since depreciation is a non-cash charge. Most companies use straight-line for financial reporting and an accelerated method (like MACRS) for tax purposes.