Depreciation Calculator

How to use this depreciation calculator

This calculator estimates how an asset's cost is allocated as depreciation expense over its useful life. It is designed for planning, bookkeeping illustrations, and model review. It is not a substitute for the tax rules, accounting policies, or professional judgment that apply to a particular entity or asset.

Choose the method that matches the asset's consumption pattern

Straight line spreads the depreciable base evenly across the useful life. It is appropriate when the asset is expected to provide a broadly consistent level of economic benefit from year to year. A higher cost or lower salvage value increases every period's expense, while a longer useful life reduces the annual amount.

Declining balance applies an accelerated rate to the asset's opening book value. The depreciation factor multiplies the straight-line rate: a factor of 2 creates double-declining balance, while 1.5 produces a less aggressive accelerated pattern. The calculation never reduces book value below salvage value. Larger factors front-load more expense and leave smaller charges in later periods.

Sum of the years' digits also accelerates expense, but it uses a fixed sequence of declining fractions. For a five-year life, the denominator is 15 and the first-year fraction is 5/15, followed by 4/15, 3/15, 2/15, and 1/15. This method can be useful when an asset is most productive early in its life but a fixed declining-balance rate would be too aggressive.

Enter the asset assumptions

• Asset cost is the capitalized amount placed on the balance sheet. It may include the purchase price and directly attributable costs required to bring the asset into service. Enter a nonnegative dollar amount.
• Salvage value is the expected residual book value at the end of the useful life. It cannot exceed cost in this model. A higher salvage value reduces the depreciable base and therefore reduces total depreciation.
• Depreciation years is the estimated useful life, entered as a whole number. The calculator supports 1 to 100 years. Avoid confusing useful life with the asset's physical life; the accounting estimate should reflect the period over which benefits are expected to be consumed.
• Depreciation factor appears for declining balance only. A factor of 2 is the familiar double-declining approach. Very high factors can push most depreciation into the first period, so compare the schedule with the asset's actual benefit pattern.
• Round schedule to dollars controls presentation. Selecting Yes rounds each displayed period to whole dollars and adjusts the final period so the schedule still ends at salvage value. Selecting No shows cents.

Partial-year settings and conventions

Turn on partial-year depreciation when the asset begins service after the start of the accounting year. The service date is the date the asset is ready and available for its intended use, not necessarily the invoice or payment date. The accounting-year month and day define the reporting period boundary; this is useful for entities with a non-calendar fiscal year.

The count-every-day convention uses the actual fraction of days remaining in the accounting year. Half-month assumes service begins in the middle of the acquisition month, while full-month gives a full month for the acquisition month. Half-quarter and full-quarter apply the same idea at the quarter level. Half-year assigns one-half of a full year's depreciation to the first accounting period regardless of the exact service date. Partial-year schedules normally contain one extra row because the unused portion of the final asset year is recognized after the last full period.

Read the results, charts, and schedule

First-period depreciation is the expense assigned to the first accounting period. For a full-year straight-line example with an $11,000 cost, $1,000 salvage value, and five-year life, the amount is $2,000. A partial-year convention reduces this first charge. Under accelerated methods, it is also affected by the factor or remaining-life fraction.

Depreciable base equals cost minus salvage value. Total depreciation is the accumulated expense over the entire schedule and should equal the depreciable base. Ending book value should equal salvage value. A zero salvage value means the asset is fully depreciated; it does not imply the asset has no market value or must be disposed of.

The cost-allocation donut reconciles original cost into accumulated depreciation and residual book value. The line chart shows book value falling as accumulated depreciation rises. At every point, ending book value plus accumulated depreciation should equal the original cost, subject only to displayed rounding. The schedule provides the audit trail: beginning book value, period rate, depreciation expense, cumulative expense, and ending book value.

Formula logic and practical checks

Straight-line annual depreciation is (cost − salvage value) ÷ useful life. Declining balance starts with factor ÷ useful life as the annual rate and applies that rate to opening book value, capped so the asset never falls below salvage. Sum-of-the-years'-digits multiplies the depreciable base by the remaining-life fraction. Partial-year conventions multiply the applicable annual charge by a first-period fraction and carry the remainder into a final period.

Common errors include entering salvage value above cost, using a tax recovery period as an accounting estimate without checking the applicable rules, depreciating land, and treating rounding differences as economic differences. For U.S. tax depreciation, review IRS Publication 946 and IRS Topic 704. For financial reporting concepts, consult the official IAS 16 overview. A plain-language review of method differences is available from Investopedia's depreciation guide.