Depreciation Calculator

Depreciation spreads the cost of a long-lived asset, such as equipment, vehicles, machinery, or a rental property, across the years it's used, rather than expensing it all at once. It matches the expense to the periods that benefit from the asset and, for businesses, shapes both reported profit and taxable income. The method you choose determines how quickly that cost is recognized.

This calculator builds a year-by-year schedule under straight-line or declining-balance methods, showing each year's depreciation expense and the asset's remaining book value.

How does this calculator work?

Enter the asset's cost, salvage value, useful life, and depreciation method. The calculator builds a year-by-year schedule of depreciation expense and book value.

Straight-line spreads the cost evenly across the useful life; declining-balance methods apply a fixed percentage to the shrinking book value, front-loading the expense into the early years.

The schedule shows depreciation expense, accumulated depreciation, and book value each year, stopping once book value reaches the salvage value.

Worked example

Depreciate a $50,000 machine with a $5,000 salvage value over 5 years, comparing straight-line to double-declining balance.

Cost / salvage / life

$50,000 / $5,000 / 5 yr

Straight-line: annual expense

$9,000/yr

Double-declining: year 1

$20,000

Double-declining: year 2

$12,000

Double-declining: year 3

$7,200

How the numbers work

Straight-line spreads the depreciable amount, cost minus salvage, evenly: ($50,000 − $5,000) ÷ 5 = $9,000 a year.

Double-declining balance uses twice the straight-line rate (2 ÷ 5 = 40%) applied to the remaining book value. Year one is $50,000 × 40% = $20,000; year two is the remaining $30,000 × 40% = $12,000; year three is $18,000 × 40% = $7,200.

Both methods write off the same $45,000 over the asset's life: accelerated depreciation just front-loads it, taking bigger deductions early and smaller ones later.

Straight-line writes off an even $9,000 every year ($45,000 ÷ 5). Double-declining balance takes $20,000 in year one, more than double, then less each year as the book value shrinks. Both eventually depreciate the same $45,000 down to the $5,000 salvage value.

Accelerated methods don't change the total deduction, only its timing: bigger write-offs (and tax savings) sooner, smaller ones later.

Straight-line vs. accelerated methods

Straight-line depreciation is the simplest and most common for financial reporting, because steady expense makes profits easy to read. Accelerated depreciation methods, such as double-declining or 150% declining balance, recognize more expense early, which suits assets that lose value or productivity fastest when new. Businesses often prefer them for taxes because earlier deductions are worth more in present-value terms, the same time-value-of-money logic behind our NPV & IRR calculator.

Note that tax depreciation in the U.S. typically follows the IRS's MACRS system with prescribed recovery periods, which may differ from the book depreciation modeled here. Use this calculator to understand the mechanics and for financial-reporting estimates, and consult a tax professional for the exact tax treatment of a specific asset.