Depreciation Calculator
Calculate depreciation expense, accumulated depreciation, and book value using straight-line, declining balance, double-declining balance, sum-of-the-years’ digits, or units-of-production methods.
Calculator is for informational purposes only and does not implement MACRS, Section 179, bonus depreciation, or jurisdiction-specific tax rules. Terms and Conditions
Straight-line depreciation allocates the depreciable amount evenly across the useful life; book value is never allowed to fall below salvage value.
Choose the depreciation method
Select the method that matches how you want depreciation expense recognized.
Enter the asset values
All monetary inputs use the same currency. Enter whole useful-life years for time-based methods.
Fields marked required must be completed. Values may include commas or scientific notation.
Depreciation Result
The primary result is the depreciation expense for the selected period, followed by book-value checks.
Result details
- Depreciable amount—
- Accumulated depreciation—
- Ending book value—
Show calculation steps Review the formula, substitution, selected-period result, salvage floor, and book-value check
- Enter valid values to see the complete calculation.
Book Value and Depreciation Schedule
The bars show ending book value by period; long schedules are sampled in the chart for readability while the table retains every period. The table provides beginning value, depreciation expense, accumulated depreciation, and ending book value.
- Enter valid values to populate the book-value chart.
| Period | Beginning Value | Depreciation | Accumulated | Ending Book Value | Value Remaining |
|---|---|---|---|---|---|
| Enter valid values to generate the schedule. | |||||
Method, Sources, and Assumptions
The calculator uses standard mathematical depreciation relationships for general book-value analysis, not a jurisdiction-specific tax schedule.
Straight-line, declining-balance, double-declining, sum-of-the-years’ digits, and units-of-production are modeled as general accounting/engineering-economics relationships. U.S. tax depreciation can require statutory recovery periods, conventions, elections, and method switching that are outside this calculator.
- Cost and salvage value must use the same currency; no foreign-exchange conversion is performed.
- Time-based methods use whole useful-life years. Straight-line can optionally prorate the first year by service months.
- General declining-balance modes are capped at salvage value and do not automatically apply tax conventions or tax-specific switching rules. A custom rate can leave book value above salvage value at the stated useful-life endpoint.
- Units-of-production requires a consistent usage unit for lifetime, prior, and current-period usage.
- Verify accounting policy and applicable tax rules before using results for statutory, tax, or audited reporting.
Calculator guide
Understanding Your Depreciation Result
The calculator above determines depreciation expense for the selected period, accumulated depreciation through that period, and the asset’s ending book value. For time-based methods, the core inputs are asset cost, salvage value, useful life, and the period you want to analyze; units-of-production instead uses lifetime and actual usage. The full schedule shows how those values change from one period to the next.
What Is Depreciation?
Depreciation allocates the depreciable cost of a long-lived asset across periods of use. It is a cost-allocation process, not a forecast of what the asset would sell for in the market or how much physical life remains.
The amount available to depreciate is the asset cost minus its salvage value. The selected method controls when that amount is recognized, while the calculator’s salvage floor prevents the ending book value from dropping below the residual value you entered.
- Main output
- Depreciation expense for the selected period
- Schedule check
- Accumulated depreciation and ending book value
- Scope
- General book-value analysis, not a MACRS tax return calculation
How to Use the Depreciation Calculator
Choose the depreciation method first because that determines which additional inputs appear. Then enter the asset values, select the period to analyze when applicable, and use the schedule to verify that the expense pattern matches the method you intended.
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Choose the depreciation method
Select Straight-Line, Double Declining Balance, Declining Balance, Sum-of-the-Years’ Digits, or Units of Production. Straight-line and accelerated methods use time; units-of-production uses measured activity.
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Enter asset cost and salvage value
Use the same currency for both. Salvage value may be zero, but it must be less than asset cost because the depreciable amount is \(C-S\).
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Enter the method-specific inputs
Time-based methods use useful life and a period to analyze. Custom declining balance also needs an annual rate. Units-of-production uses estimated lifetime production, prior usage, and usage during the current period.
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Use partial-year straight-line only when needed
The Advanced Options field for first-year service months applies only to straight-line depreciation. Leave it blank or use 12 for a full first year; a smaller whole-month value prorates the first period and carries the remaining fraction into a final schedule period.
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Check the result and schedule together
Do not stop at the primary depreciation number. Confirm the accumulated depreciation, ending book value, and year-by-year schedule before using the result in a model or report.
Inputs and Outputs Explained
The result is only as defensible as the asset cost, salvage value, useful life, rate, or usage assumptions entered. These fields affect different parts of the schedule, so it helps to know exactly what each one represents.
- Asset Cost, \(C\)
- The depreciable cost or basis being analyzed. Depending on the applicable accounting policy, the capitalized amount may include qualifying costs required to acquire and place an asset into service, not merely its invoice purchase price. The calculator does not determine which costs qualify for capitalization.
- Salvage / Residual Value, \(S\)
- The expected book value remaining at the end of the depreciation schedule. The calculator enforces \(BV \ge S\), so depreciation cannot reduce book value below this amount.
- Useful Life, \(n\)
- The whole number of years used by the time-based methods. A longer life spreads straight-line depreciation across more periods; tax recovery periods may be different.
- Period to Analyze
- The schedule period shown as the primary result. For a normal full-year schedule, period 1 is year 1. A prorated straight-line schedule can contain one additional final period.
- Declining-Balance Rate, \(r\)
- The annual percentage applied to beginning book value in custom declining-balance mode. The calculator accepts a rate above 0% and no greater than 100%.
- Production or Usage
- Units-of-production requires estimated lifetime units, units used before the current period, and units used during the current period. The same unit must be used for all three, such as hours, cycles, miles, or MWh.
- Depreciation Expense
- The amount allocated to the selected period under the chosen method.
- Accumulated Depreciation and Book Value
- Accumulated depreciation is the total expense recognized through the selected period. Ending book value is the original cost minus accumulated depreciation.
Depreciation Methods and Formulas
There is no single depreciation formula for every method. Straight-line spreads the depreciable amount evenly, declining methods apply a rate to book value, sum-of-the-years’ digits uses a decreasing life fraction, and units-of-production follows usage instead of elapsed time.
Straight-Line Depreciation
Plain language: subtract salvage value from cost, then divide the depreciable amount evenly across the useful life.
When first-year service months are entered, the calculator prorates the first straight-line period by \(m/12\) and carries the unused fraction into the final period.
Double Declining Balance
Plain language: apply twice the straight-line rate to beginning book value, but cap the expense so the asset does not fall below salvage value.
Custom Declining Balance
Plain language: multiply beginning book value by the rate you entered, subject to the same salvage-value floor.
A low custom rate can leave the asset above salvage value when the stated useful life ends. That is mathematically possible and is not automatically corrected by switching methods.
Sum-of-the-Years’ Digits
Plain language: multiply the depreciable amount by a fraction based on the remaining life. The fraction is largest in the first year and decreases each year.
Units-of-Production Depreciation
Plain language: find depreciation per lifetime usage unit, multiply by usage during the current period, and cap the result at the amount remaining above salvage value.
- \(C\)
- Asset cost, in currency.
- \(S\)
- Salvage or residual value, in the same currency.
- \(n\)
- Useful life in whole years for time-based methods.
- \(t\)
- Schedule period being evaluated.
- \(BV\)
- Book value at the stated point in the schedule.
- \(r\)
- Annual declining-balance rate written as a decimal in the formula.
- \(U_L\)
- Estimated lifetime production or usage.
- \(U_p\)
- Usage during the current period.
Straight-Line Depreciation Worked Example
Use the calculator’s default example to verify the schedule by hand: an asset costs $50,000, has a $5,000 salvage value, and is depreciated straight-line over 5 years with a full first year.
Find the depreciable amount
Calculate annual depreciation
Calculate Year 3 book value
Result
$9,000 depreciation per full year; $23,000 ending book value after Year 3.
After five full years, accumulated depreciation is $45,000 and the schedule ends at the $5,000 salvage value.
How to Read the Depreciation Schedule
The schedule is the best way to verify a depreciation calculation because it shows the complete roll-forward from beginning book value to depreciation expense, accumulated depreciation, and ending book value.
Follow the book-value roll-forward
For each row, ending book value should equal beginning book value minus that period’s depreciation. The next row should begin at the prior row’s ending value.
Check accumulated depreciation
Accumulated depreciation should equal the sum of all depreciation charges through the selected period. Net book value can also be checked as \(BV=C-AD\).
Check the pattern, not just the total
Straight-line should be level for full periods, DDB and SYD should be front-loaded, and units-of-production should move with usage. A pattern that does not match the selected method is a reason to recheck inputs.
Fully depreciated does not mean unusable
When book value reaches the entered salvage value, the calculator has exhausted the depreciable amount under that schedule. That does not mean the asset has failed, must be replaced, has zero market value, or cannot continue operating.
Book value does not measure equipment condition
For machinery and engineered assets, depreciation does not assess vibration, bearing condition, insulation degradation, corrosion, fatigue damage, seal wear, or remaining mechanical life. A pump or motor can be near its accounting salvage value and still have substantial service life, while a high-book-value asset can fail early.
Which Depreciation Method Should You Use?
Choose a method based on the accounting or analysis objective and on whether time or actual usage best represents the allocation pattern. The calculator makes the mathematical comparison easy, but it does not choose an accounting policy for you.
| Method | Pattern | Main Additional Input | When Useful |
|---|---|---|---|
| Straight-Line | Equal full-period expense | None beyond cost, salvage, and life | Even time-based allocation |
| Double Declining Balance | Strongly accelerated | None; useful life determines \(2/n\) | Higher depreciation early in the schedule |
| Declining Balance | Accelerated at a custom rate | Annual percentage rate | Sensitivity cases using a specified declining rate |
| Sum-of-the-Years’ Digits | Accelerated with a decreasing fraction | None beyond cost, salvage, and life | Structured front-loaded allocation |
| Units of Production | Usage-based | Lifetime, prior, and current usage | Wear or consumption is better represented by hours, cycles, miles, production, or energy output |
Same Asset, Different Depreciation Timing
Using the same $50,000 cost, $5,000 salvage value, and 5-year useful life makes the timing difference easy to see. The table below uses a 20% rate for the custom declining-balance example.
| Method | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Straight-Line | $9,000 | $9,000 | $9,000 |
| Double Declining Balance | $20,000 | $12,000 | $7,200 |
| Sum-of-the-Years’ Digits | $15,000 | $12,000 | $9,000 |
| Declining Balance at 20% | $10,000 | $8,000 | $6,400 |
The asset and depreciable basis are unchanged; the methods differ in when depreciation is recognized. A custom declining rate may also leave the asset above salvage value when the entered useful life ends if the selected rate is not high enough to exhaust the depreciable amount.
OpenStax’s accounting text describes straight-line, units-of-production, and double-declining balance as commonly used allocation methods and notes that sum-of-the-years’ digits is another accelerated option. See OpenStax, Principles of Accounting: Depreciation Methods.
Book Depreciation, Tax Depreciation, and Limits
The calculator models general depreciation relationships for book-value and engineering-economics analysis. It does not implement the statutory rules needed for a U.S. federal tax depreciation schedule or verify an organization’s accounting policy.
Book value does not measure physical condition
A machine with a low book value may still have substantial useful service life, while an asset with a high book value can be physically damaged or technologically obsolete. Condition assessment and depreciation answer different questions.
Useful life is an input, not a measured prediction
The calculator does not estimate fatigue life, bearing life, corrosion loss, warranty life, or remaining useful life. Enter the life required by the accounting or planning basis you are analyzing.
Salvage value is an assumption
Changing salvage value changes the total depreciable amount. A resale forecast, scrap estimate, or accounting residual value should be justified separately rather than inferred from the calculator.
Tax depreciation follows separate rules
For U.S. federal taxes, MACRS can involve statutory recovery periods, GDS or ADS, conventions, Section 179, special depreciation allowances, listed-property rules, and other requirements that are outside this tool.
Sources and Calculation Checks
The calculator’s equations were checked against standard depreciation relationships and independently reconciled using book-value and accumulated-depreciation identities. Tax-specific claims are limited to the scope described by the IRS.
- OpenStax — Explain and Apply Depreciation Methods to Allocate Capitalized Costs — supports the general accounting treatment and formulas for straight-line, units-of-production, double-declining balance, the role of salvage value and useful life, and the inclusion of qualifying acquisition and placement-in-service costs in capitalized asset cost.
- IRS Publication 946 — How To Depreciate Property — supports the distinction between general book-depreciation calculations and U.S. federal tax depreciation rules such as MACRS and Section 179.
The default worked example was cross-checked two ways: the five straight-line charges sum to the $45,000 depreciable amount, and original cost minus accumulated depreciation reproduces the ending book value. The calculator also enforces a salvage-value floor so a schedule cannot depreciate below the entered residual value.
Depreciation Calculator FAQ
These questions cover useful follow-up issues that are not already answered by the main calculation steps above.
What happens when an asset is fully depreciated?
Under this calculator, the asset stops generating additional depreciation once its book value reaches the entered salvage value or the modeled depreciable amount is otherwise exhausted. The asset can still remain in service after that point.
Can an asset still be used after it reaches salvage value?
Yes. Reaching salvage value is an accounting-schedule event, not a physical failure limit. Continued use depends on condition, reliability, safety, maintenance requirements, economics, and any applicable operating constraints.
Can salvage value be zero?
Yes. The calculator accepts zero salvage value. Whether zero is a defensible accounting assumption depends on the asset and the basis of your analysis; the calculator does not estimate residual value for you.
Is depreciation a cash expense?
Depreciation itself is a non-cash accounting expense. The cash outflow generally occurs when the asset is purchased or through the financing and payment arrangements used to acquire it. Tax effects can make depreciation relevant to after-tax cash-flow analysis, but this calculator does not determine those tax effects.