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Asset Depreciation Calculator

Calculate asset depreciation schedules using Straight-Line, Double Declining Balance, and SYD.

Depreciation — interactive calculator, computed instantly in your browser.

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Depreciation Curves: Straight-Line vs Accelerated Declining Balance

Straight-Line vs Accelerated: Straight-line spreads cost evenly across years, whereas Double Declining Balance accelerates write-offs into early years when machinery or technology loses value fastest.

Depreciation is an accounting mechanism that allocates the cost of a tangible fixed asset over its estimated useful operational lifespan. It adheres to the matching principle in GAAP accounting by pairing the asset's expense with the revenue it generates each year.

1. Depreciation Methodologies & Formulas

Businesses commonly utilize several primary depreciation methods depending on asset type and corporate tax strategy:

\textbf{Straight-Line (SL):} \quad D = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life (Years)}}

\textbf{Double Declining Balance (DDB):} \quad D_t = \text{Book Value}_{t-1} \times \left( \frac{2}{\text{Useful Life}} \right)

\textbf{Sum-of-the-Years' Digits (SYD):} \quad D_t = (\text{Cost} - \text{Salvage}) \times \frac{\text{Remaining Life}}{\frac{n(n+1)}{2}}

2. Practical Worked Example: $30,000 Equipment (5-Year Life, $3,000 Salvage)

Evaluating a manufacturing machine costing $30,000 with a $3,000 salvage value over a 5-year useful life:

Depreciable Base: $$30,000 - \$3,000 = \$27,000$ total depreciation over life.
Straight-Line Annual Expense: $$27,000 \div 5 = \mathbf{\$5,400}$ per year.
DDB Rate: $(2 / 5) = 40.0\%$ applied to beginning book value.
- Year 1: $$30,000 \times 40\% = \$12,000$ (Ending Book Value: $$18,000$)
- Year 2: $$18,000 \times 40\% = \$7,200$ (Ending Book Value: $$10,800$)
- Year 3: $$10,800 \times 40\% = \$4,320$ (Ending Book Value: $$6,480$)
- Year 4: $$6,480 \times 40\% = \$2,592$ (Ending Book Value: $$3,888$)
- Year 5: Depreciates down to exactly the $\$3,000$ salvage floor ($$888$).

3. Comprehensive Depreciation Schedule Matrix

Year	Straight-Line Expense	Straight-Line Book Value	DDB Expense	DDB Book Value
Year 0	-	$30,000	-	$30,000
Year 1	$5,400	$24,600	$12,000	$18,000
Year 2	$5,400	$19,200	$7,200	$10,800
Year 3	$5,400	$13,800	$4,320	$6,480
Year 4	$5,400	$8,400	$2,592	$3,888
Year 5	$5,400	$3,000	$888	$3,000

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Frequently Asked Questions (Depreciation)

What is Salvage Value (Residual Value)?

Salvage value is the estimated resale or scrap value of an asset at the end of its useful working life. An asset cannot be depreciated below its salvage value under GAAP and IFRS rules.

What is MACRS in United States business tax accounting?

MACRS (Modified Accelerated Cost Recovery System) is the required tax depreciation system in the US. It assigns assets into statutory recovery classes (e.g. 3, 5, 7, or 15 years) and assumes zero salvage value for tax deduction purposes.

Is depreciation a cash expense?

No. Depreciation is a non-cash accounting expense. The cash outflow occurred when the asset was purchased. However, depreciation reduces taxable net income, resulting in actual cash savings through lower tax liability.