Depreciation Calculator

Book value and the depreciable base

Depreciation spreads the cost of a long-lived asset over the years it is used, instead of charging all of it to the year it was bought. An asset's book value is its cost minus the depreciation recorded so far. The depreciable base is the part that gets spread: cost minus salvage value, where salvage value is the amount you expect the asset to be worth at the end of its life. For an 11,000 machine with a 1,000 salvage value, the base is 10,000, and every method depreciates exactly that 10,000 in total. The methods differ only in timing. Salvage value is never depreciated, so book value stops at 1,000. This calculator records accounting (book) depreciation and does not estimate tax deductions or the price you could sell the asset for.

Book value is a bookkeeping figure, so it can sit above or below what the asset would sell for.

Straight-line depreciation example

Straight line is the simplest method and the one most schedules start with. The yearly expense is the same in every year: (cost − salvage) ÷ useful life. For the example asset that is (11,000 − 1,000) ÷ 5 = 2,000.00 a year. Book value falls from 11,000 to 9,000 after year one, and by the end of year five it reaches 1,000. The expense is also 20% of the depreciable base each year. Straight line is a sensible default when an asset is used about equally every year, such as office furniture. A three-year life with a 10,000 cost and 1,000 salvage would give 3,000 a year.

Two variations show how the inputs matter. With no salvage value the base is the full 11,000, so the yearly expense becomes 2,200.00. With a three-year life, 10,000 cost and 1,000 salvage, the expense is 3,000.00 a year. In both cases the yearly share of the base is 1 divided by the life, 20% for five years and 33.33% for three. A longer life lowers each year's charge and spreads it further out, so the life estimate is a judgment worth documenting.

Declining balance, salvage and the final catch-up

Declining balance charges a fixed percentage of the remaining book value each year, so the expense is largest at the start. The yearly rate is the depreciation factor divided by the life. With a factor of 2, called double declining balance, a five-year asset is depreciated at 2 ÷ 5 = 40% of book value a year. The first-year expense is 40% of 11,000, or 4,400.00; the second is 40% of 6,600, or 2,640.00; and so on: 4,400.00, 2,640.00, 1,584.00, 950.40, 425.60.

Notice that the formula ignores salvage value, but the schedule cannot go below it. In the fifth year the formula would take more than the book value above salvage, so the expense is limited to what remains, 425.60, and the asset ends at 1,000. This model does not switch to straight line part-way through, and it flags the final year as a catch-up to salvage so you can see it. Tax systems and some accounting policies add their own switching rules, so a result here will not match them. The factor must not exceed the life, because that would mean a yearly rate above 100%, and a one-year life therefore needs a factor of 1.

A factor of 1.5, often called 150% declining balance, gives a 30% yearly rate, so the first-year expense on the example asset is 3,300.00.

Sum-of-the-years'-digits depreciation

Sum of the years' digits also front-loads the expense, using fractions that shrink by one step each year. For a five-year life the digits add up to 1 + 2 + 3 + 4 + 5 = 15, so the first year takes 5/15 of the base, the second 4/15, and the last 1/15. On the 10,000 base that is 3,333.33 in year one, then 2,666.67, 2,000.00, 1,333.33, 666.67. The fractions always add to one, so the total reaches the base exactly. Compared with double declining balance, the first-year expense is lower (3,333.33 against 4,400.00) and the later expense is higher, and the book value never needs a catch-up. A fourth method, units of production, depreciates by output rather than time. It is not part of this version, which allocates by years.

For a four-year life the digits add to 1 + 2 + 3 + 4 = 10, so the shares are 4/10, 3/10, 2/10 and 1/10 of the base: 4,000.00, 3,000.00, 2,000.00, 1,000.00.

Partial-year and fiscal-year conventions

Assets rarely arrive on the first day of the accounting year. A partial-year convention decides what share of a year the asset is in service during its first fiscal year. Enter the date service starts and the day your accounting year begins, then choose a convention. For an asset starting on 30 October 2026 with a January 1 year start:

Counting every day uses 63 of 365 days, which is 17.26% of a year. Full-month treats the whole of October as in service, so it counts October, November and December. The half-month, half-quarter and half-year conventions apply their stated half-period assumption. If the accounting year starts in July instead, the same October date counts nine fiscal months, 75.00% of the year. Each service year's expense is spread evenly across that service year and then assigned to fiscal periods, so a declining-balance schedule with a half-year start begins at 2,200.00 and has six fiscal periods. This is an explicit allocation rule chosen for clarity, not a claim that every accounting package uses the same one.

Always enter the date the asset was ready for use, not the date it was ordered or paid for.

Rounding, export and printing

The schedule is allocated in whole cents so every row adds up: opening book value minus expense equals closing book value, accumulated depreciation is the running total, and the last row ends at salvage. When individual years round differently from the unrounded split, the final period absorbs the difference so the total is exactly cost minus salvage, and no row ever takes book value below salvage. The sum-of-years example shows this: its first three years round to 3,333.33, 2,666.67 and 2,000.00. The switch for whole dollars changes only the display; the calculation and the CSV keep cents. Use the CSV button for a spreadsheet-ready schedule, or print the page for a paper copy.

Whole-dollar display is for reading only. A CSV opened in a spreadsheet still shows the cents that reconcile with the ledger.

Percentages in the last column divide each period's expense by cost minus salvage.

Tax depreciation and resale value are different

Book depreciation is an accounting allocation. It is not the same as the deduction on a tax return, which follows separate rules. In the United States, for example, the Internal Revenue Service explains tax depreciation, including the Modified Accelerated Cost Recovery System and the section 179 deduction, in Publication 946. Those systems set their own property classes, recovery periods and conventions. Nor is book value a market price: a machine's resale value can be far above or below its book value. Do not use these results as tax advice or as a valuation. When you are working through business costs, see how fixed costs affect break-even sales, allocate equipment cost into selling prices, and separate depreciation from cash outflow when judging an investment.

Depreciation calculator questions

Why is salvage value not depreciated?

Salvage value is what you expect to recover at the end of the asset's life, so only cost minus salvage is expensed. Book value stops at salvage.

Why does declining balance end with a catch-up year?

The percentage formula alone rarely lands exactly on salvage. This model has no automatic switch to straight line, so the last year is set to whatever remains, and it is flagged in the table.

How is a mid-year start allocated?

The first fiscal period gets a share of a year set by the convention you choose, and the rest of the schedule is allocated by service year and then assigned to fiscal periods.

Is book value the same as resale value?

No. Book value is cost less recorded depreciation. Market value depends on condition, demand and timing, and can differ widely from book value.

Can I use the schedule for taxes?

Not directly. Tax depreciation follows separate rules, such as the classes and conventions in IRS Publication 946, so a book schedule does not verify tax eligibility or amounts.