Depreciation Calculator
Straight-line and declining balance schedules.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Annual depreciation (straight line)
- $5,400.00
- Total depreciated
- $27,000.00
- Book value at end
- $3,000.00
- Depreciable base
- $27,000.00
| Year | Depreciation | Book value |
|---|---|---|
| 1 | $5,400.00 | $24,600.00 |
| 2 | $5,400.00 | $19,200.00 |
| 3 | $5,400.00 | $13,800.00 |
| 4 | $5,400.00 | $8,400.00 |
| 5 | $5,400.00 | $3,000.00 |
Quick answer
Straight-line depreciation spreads an asset's cost evenly over its useful life: (cost − salvage value) ÷ useful life. A $30,000 machine expected to be worth $3,000 after 5 years depreciates by $5,400 a year. Double declining balance instead charges 2 ÷ life of the remaining book value each year — 40% for a 5-year asset — so the first year's expense is $12,000 and later years are smaller.
What the Depreciation calculator does
This calculator produces a depreciation schedule for a business asset: the expense for each year and the book value left at the end of it. Choose straight line for an equal charge every year, or double declining balance to front-load the expense for assets that lose value quickly, such as vehicles and computers. The straight-line annual figure is always shown for comparison.
It is built for book (financial statement) depreciation — the figure in your management accounts or the accounts a lender sees. US tax depreciation follows separate IRS rules (MACRS, Section 179 and bonus depreciation), so your tax return will usually show different numbers; see the section below.
You need three things: what the asset cost to buy and put into service (including delivery and installation), what you expect to sell it for at the end (salvage value), and how many years you expect to use it. Depreciation is an expense but not a cash payment, which is why it is added back when you work out EBITDA.
The formula
Straight line: D = (C − S) ÷ L Double declining: Dₜ = BVₜ₋₁ × 2 ÷ L, never taking book value below S BVₜ = BVₜ₋₁ − Dₜ
| Symbol | Meaning | Unit |
|---|---|---|
| C | Asset cost including shipping, installation and setup | $ |
| S | Salvage (residual) value expected at the end of its useful life | $ |
| L | Useful life | years |
| D, Dₜ | Depreciation expense for a year | $ |
| BVₜ | Book value at the end of year t (starts at C) | $ |
Both methods are standard under US GAAP (ASC 360) and IFRS (IAS 16), which require the method to reflect how the asset's benefits are used up. This calculator applies the double declining rate every year and stops at salvage value. It does not switch to straight line partway through, which many accountants do when the straight-line charge on the remaining balance becomes larger; with a low salvage value, some book value can therefore remain at the end of the life.
Worked examples
Production machine, straight line
A workshop buys a $30,000 CNC machine, expects to use it for 5 years and sell it for $3,000.
Inputs
- Asset cost30000 $
- Salvage value3000 $
- Useful life5 years
- MethodStraight line
Result
- Annual depreciation (straight line)$5,400.00
- Total depreciated$27,000.00
- Book value at end$3,000.00
- Depreciable base$27,000.00
Depreciation is $5,400 every year and book value falls to $3,000 after year 5. The even charge makes profit comparable from year to year.
Office laptop over three years
A $2,400 laptop with an expected resale value of $200 after 3 years, depreciated straight line.
Inputs
- Asset cost2400 $
- Salvage value200 $
- Useful life3 years
- MethodStraight line
Result
- Annual depreciation (straight line)$733.33
- Total depreciated$2,200.00
- Book value at end$200.00
- Depreciable base$2,200.00
The expense is $733.33 a year. Many small businesses simply expense items this cheap under a capitalization threshold rather than depreciating them; check your accounting policy.
Delivery truck, double declining balance
An $85,000 box truck with a 7-year life and $10,000 expected resale value, depreciated with double declining balance because it loses most value early.
Inputs
- Asset cost85000 $
- Salvage value10000 $
- Useful life7 years
- MethodDouble declining
Result
- Annual depreciation (straight line)$10,714.29
- Total depreciated$75,000.00
- Book value at end$10,000.00
- Depreciable base$75,000.00
Year 1 depreciation is $24,285.71 against $10,714.29 under straight line, and the schedule tapers to $1,288.88 in year 7 as book value reaches the $10,000 salvage value. Total depreciation is $75,000 either way; only the timing changes.
Straight line versus double declining, year by year
The same $30,000 asset with $3,000 salvage value and a 5-year life. Double declining charges 40% of the opening book value each year, then a smaller final charge so book value lands on salvage value.
| Year | Straight line | Book value (SL) | Double declining | Book value (DDB) |
|---|---|---|---|---|
| 1 | $5,400 | $24,600 | $12,000 | $18,000 |
| 2 | $5,400 | $19,200 | $7,200 | $10,800 |
| 3 | $5,400 | $13,800 | $4,320 | $6,480 |
| 4 | $5,400 | $8,400 | $2,592 | $3,888 |
| 5 | $5,400 | $3,000 | $888 | $3,000 |
Choosing useful life and salvage value
- Useful life is how long your business expects to use the asset, not how long it could physically last. A delivery van replaced every 5 years has a 5-year life even if it could run for 12.
- Salvage value is what you expect to get when you dispose of it, net of selling costs. Look at used prices for similar equipment of that age; use zero for assets you will scrap.
- Review both if circumstances change. Under GAAP and IFRS a change in estimate is applied to future years, not by restating the past.
For vehicles specifically, real market value often falls faster than either schedule; the car depreciation calculator estimates resale value rather than accounting book value.
Book depreciation versus US tax depreciation (MACRS)
On a US federal tax return, most business assets are depreciated under MACRS, described in IRS Publication 946. MACRS assigns each asset a recovery period by class rather than your own estimate of useful life, ignores salvage value, and uses set conventions for the year the asset is placed in service.
- Computers, cars and light trucks: 5-year property.
- Office furniture and most machinery: 7-year property.
- Residential rental buildings: 27.5 years, straight line.
- Commercial buildings: 39 years, straight line.
Section 179 expensing and bonus depreciation can let you deduct much or all of an asset's cost in the first year, subject to limits that change with legislation. Ask a tax professional which applies to your purchases.
How to use the Depreciation Calculator
- 1Enter the asset's total cost, including delivery, installation and setup, from the purchase invoice.
- 2Enter the salvage value you expect when you sell or scrap it; use 0 if it will have no resale value.
- 3Enter the useful life in whole years — how long your business will use it.
- 4Choose straight line for an even expense, or double declining for assets that lose value fastest when new.
- 5Read the annual expense, the year-by-year schedule and the book value at the end.
Frequently asked questions
How do you calculate straight-line depreciation?
Subtract salvage value from cost and divide by useful life in years. A $12,000 asset with a $2,000 salvage value over 4 years depreciates $2,500 a year.
What is the double declining balance rate?
Twice the straight-line rate: 2 ÷ useful life. A 5-year asset uses 40% and a 10-year asset uses 20%, applied each year to the remaining book value.
Which depreciation method is best?
Straight line suits assets that provide similar value every year, such as buildings and furniture. Declining balance better matches vehicles, computers and machinery that lose more value and do more work early on.
Is land depreciated?
No. Land is not depreciated because it does not wear out. When you buy property, split the price between land and building and depreciate only the building.
What happens when an asset is sold before it is fully depreciated?
You compare the sale price with the book value at that date; the difference is a gain or loss on disposal. For tax purposes, gains on depreciated assets may be partly taxed as depreciation recapture; the capital gains tax calculator covers the tax on an ordinary capital gain.
References
- Publication 946, How To Depreciate Property — Internal Revenue Service
- IAS 16 Property, Plant and Equipment — IFRS Foundation
- Accounting Standards Codification Topic 360, Property, Plant, and Equipment — FASB
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
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