Depreciation Calculator
Calculate asset depreciation using various methods for accounting and tax purposes
Asset Depreciation Calculator
This depreciation calculator is designed for accounting purposes and supports three primary depreciation methods: straight line, declining balance, and sum of the years' digits.
For double declining balance calculations, simply select the declining balance method and set the depreciation factor to 2. The calculator can also handle partial-year depreciation scenarios with flexible accounting year date settings.
Enter your asset details below to generate a complete depreciation schedule with visual charts and detailed yearly breakdowns for your accounting and tax planning needs.
đĸ Asset Information
đ Depreciation Results
Depreciation Methods
đ Understanding Depreciation
Straight Line Method
The most widely used and simplest method. It distributes the cost evenly across the useful life of the asset. Annual depreciation = (Asset Cost - Salvage Value) / Useful Life.
Declining Balance
Assets depreciate faster when new and slower as they age. Double declining balance is most common, using twice the straight-line rate applied to book value.
Sum of Years' Digits
Accelerated depreciation method where depreciation decreases each year. Uses fractions based on the sum of the years of useful life.
What is Depreciation?
Depreciation is the reduction in the value of an asset over time due to elements such as wear and tear. For accounting purposes, depreciation concerns allocating the cost of an asset over a period of time, usually its useful life. When a company purchases an asset, such as equipment, large purchases can skew the income statement confusingly.
Instead of appearing as a sharp jump in the accounting books, this can be smoothed by expensing the asset over its useful life. Within a business in the U.S., depreciation expenses are tax-deductible, making proper depreciation calculation essential for tax planning.
Key Depreciation Concepts
- Asset Cost: The original purchase price of the asset including installation costs
- Salvage Value: The estimated value of the asset at the end of its useful life
- Useful Life: The expected period over which the asset will be used in business
- Book Value: The asset's value on the balance sheet (cost minus accumulated depreciation)
- Tax Benefits: Depreciation reduces taxable income, providing tax savings