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Depreciation Calculator

This depreciation calculator spreads the cost of an asset over its useful life. Example: a cost of 10,000, a salvage value of 1,000 and 5 years give 1,800 per year with the straight-line method.

Source: Wikipedia – Depreciation (linear, declining balance, sum-of-years-digits). Updated: .

Expected value at the end of use; 0 if the asset is written off completely.
years
Whole years, 1 to 100.
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Result

Result
Straight-line: first-year depreciation = 1,800 · total = 9,000 · closing book value = 1,000
Depreciation schedule by year
YearDepreciationAccumulatedBook value at year end
11,8001,8008,200
21,8003,6006,400
31,8005,4004,600
41,8007,2002,800
51,8009,0001,000
Calculation steps
  • Straight-line: (cost − salvage) / years = (10,000 − 1,000) / 5 = 1,800 per year.
  • Total depreciation = 9,000; closing book value = 10,000 − 9,000 = 1,000.
Straight-line spreads the depreciable amount (cost minus salvage) evenly over all years.

How it is calculated

Depreciation allocates an asset’s cost, less its salvage value, to the years in which it is used. This calculator shows the three general accounting methods side by side without the rules of any particular country. For German tax depreciation there is a separate tool, the AfA calculator.

The three methods

Straight-line charges the same amount each year: (C − S) / n. Declining balance applies a fixed percentage to the remaining book value each year; the rate is factor / n, so factor 2 is the double-declining variant. Sum-of-the-years-digits weights the years n, n−1, … 1 and divides (C − S) by n·(n+1)/2.

Worked example

Cost 10,000, salvage 1,000, 5 years. Straight-line: 9,000 / 5 = 1,800 per year. Sum of digits: 5+4+3+2+1 = 15, giving 3,000, 2,400, 1,800, 1,200 and 600. Declining balance with factor 2 (rate 40%): 4,000, 2,400, 1,440, 864 and only 296 in year five, because otherwise the book value would drop below 1,000.

Frequently asked questions

What is the difference between straight-line and declining-balance depreciation?

Straight-line charges the same amount every year, declining balance a fixed percentage of the current book value, so more at the start. In the example that is 1,800 a year versus 4,000 in year one.

How is the sum of the years’ digits calculated?

For n years the digit sum is n·(n+1)/2, which is 15 for 5 years. Year one receives 5/15 of the depreciable amount, year two 4/15, and so on.

Does this apply to tax depreciation?

No. It uses general textbook methods. Tax lives, rates and eligibility depend on the country; for Germany use the AfA calculator.

Sources and legal basis

As of: · Editorial policy

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