Depreciation Calculator
Calculate the annual depreciation of any asset using Straight-Line, Double Declining Balance, or Sum-of-Years Digits methods with a full depreciation schedule.
Frequently Asked Questions
What is Straight-Line (SL) depreciation and when should I use it?
SL depreciation spreads the cost evenly over an asset's useful life: Annual depreciation = (Cost − Salvage Value) ÷ Useful life in years. For example, a $50,000 machine with $5,000 salvage value over 5 years depreciates $9,000/year. Use SL for assets with consistent utility over time — buildings, furniture, office equipment.
When should I use Double Declining Balance (DDB) depreciation?
DDB is an accelerated method: Year 1 depreciation = 2 × (Cost ÷ Useful life). It front-loads deductions, which is advantageous for tax purposes and appropriate for assets that lose value rapidly in early years — vehicles, computers, manufacturing equipment. DDB switches to straight-line when SL would give a larger deduction.
What is the Sum-of-Years Digits (SYD) method?
SYD is another accelerated method using a fraction: (Remaining life ÷ Sum of years digits) × (Cost − Salvage). For a 5-year asset, the sum of digits = 1+2+3+4+5 = 15. Year 1 fraction = 5/15 = 33.3%, Year 2 = 4/15 = 26.7%, etc. It depreciates faster than SL but slower than DDB.
What is salvage value and how do I estimate it?
Salvage value (residual value) is the estimated worth of an asset at the end of its useful life. Vehicles: check used car market values. Equipment: often 10–15% of cost. Buildings: rarely zero. If uncertain, use 0 for a conservative estimate. Only the depreciable amount (cost minus salvage) is depreciated over the asset's life.
What depreciation method should I use for tax purposes?
In the US, the IRS mandates MACRS (Modified Accelerated Cost Recovery System) for most business assets — which uses DDB or SL depending on asset class. In the UK, HMRC uses capital allowances (Annual Investment Allowance, Writing Down Allowance). Consult a tax advisor; this calculator models accounting depreciation, which may differ from tax depreciation.