Depreciation Calculator
Calculate asset straight-line depreciation expense and book value schedules over asset lifespan.
Depreciation
Schedule
| Year | Depreciation | Accumulated | Book value |
|---|
Spreading a cost across the years it earns
Depreciation allocates the cost of an asset across its useful life rather than expensing it all at once, so that the cost lands in the same periods as the revenue it helps produce. It is an accounting allocation, not a cash movement — the money left when you bought the asset, and depreciation simply decides which years absorb it.
The method changes the timing, never the total. Straight-line spreads cost evenly and is the default for financial reporting. Declining balance, including double-declining, front-loads the expense, which matches assets that genuinely lose most value early — vehicles and computers being the standard examples. Units of production ties the charge to actual usage, which suits machinery with a measurable output life. Every method arrives at the same cumulative figure by the end.
Tax depreciation is a separate system from book depreciation and follows prescribed schedules rather than your judgement of useful life, which is why most businesses maintain both. Two practical notes: salvage value is the estimated worth at the end of life and is subtracted from the depreciable base under straight-line; and selling an asset for more than its written-down value usually triggers a recapture charge on the difference.
Frequently asked questions
What is straight-line depreciation?
Straight-line depreciation spreads the depreciable cost of an asset evenly across its useful lifespan.
What are the main depreciation methods?
Straight-line spreads cost evenly over the useful life. Declining balance and double-declining balance front-load the expense. Sum-of-years-digits is another accelerated method. Units of production ties depreciation to actual usage. The choice affects reported profit and tax timing, not the total amount eventually deducted.
What is the difference between book and tax depreciation?
Book depreciation follows accounting standards and aims to match expense to the asset's economic use. Tax depreciation follows statutory schedules - MACRS in the US - which are usually accelerated to encourage investment. The two diverge routinely, and the gap creates the deferred tax balances you see on a balance sheet.
What is salvage value?
The estimated resale or scrap value at the end of the useful life. Straight-line and sum-of-years-digits subtract it before calculating the depreciable base; declining balance ignores it during the calculation but stops depreciating once book value reaches it. Overestimating salvage value understates annual expense.