Finance & Business
Depreciation Calculator
Calculate asset depreciation and book value using different depreciation methods.
Enter values to calculate depreciation
Related to Depreciation Calculator
The depreciation calculator helps you determine how an asset's value decreases over time using different depreciation methods. It considers the asset's initial cost, estimated salvage value at the end of its useful life, and the time period over which the asset will be depreciated.
Supported Depreciation Methods
1. Straight-line Depreciation: Equal annual depreciation over the asset's life 2. Declining Balance: Accelerated depreciation with a fixed rate applied to the remaining book value 3. Sum-of-Years Digits: Accelerated depreciation based on remaining life fraction
Each method has its own formula and use cases. The calculator provides a complete depreciation schedule showing the annual depreciation amount, accumulated depreciation, and remaining book value for each year of the asset's life.
The calculator provides a comprehensive view of asset depreciation over time:
Annual Depreciation
The amount by which the asset's value decreases each year. This varies by method: - Straight-line: Constant annual amount - Declining Balance: Higher in early years - Sum-of-Years: Decreasing amounts based on remaining life
Accumulated Depreciation
The total amount of depreciation taken since the asset's acquisition. This increases each year until it reaches the total depreciable amount (initial cost minus salvage value).
Book Value
The asset's remaining value at any point in time, calculated as the initial cost minus accumulated depreciation. The book value approaches the salvage value as depreciation accumulates.
The interactive graph shows how the book value decreases and accumulated depreciation increases over time, helping visualize the depreciation pattern for each method.
1. What is depreciation?
Depreciation is an accounting method to allocate the cost of tangible assets over their useful life. It represents how the asset's value decreases over time due to use, wear and tear, or obsolescence. This systematic allocation helps match the asset's cost with the revenue it generates.
2. Which depreciation method should I use?
The choice depends on your asset and business needs. Straight-line is simplest and most common, suitable for assets that depreciate steadily. Declining balance is good for assets that lose value quickly early on (like vehicles). Sum-of-years digits provides a middle ground between the two approaches.
3. What is salvage value?
Salvage value (or residual value) is the estimated value of an asset at the end of its useful life. It's what you expect to get from selling or disposing of the asset after it's fully depreciated. This amount is not depreciated - only the difference between initial cost and salvage value is depreciated.
4. How does declining balance depreciation work?
Declining balance applies a fixed rate to the asset's remaining book value each year. The rate is often 200% (double) or 150% of the straight-line rate. This results in larger depreciation expenses in early years and smaller ones later, reflecting how many assets lose value more quickly when new.
5. What is the scientific source for this calculator?
This calculator implements standard depreciation methods as defined by the International Accounting Standards Board (IASB) in IAS 16 - Property, Plant and Equipment. The formulas and methodologies are based on Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The calculations follow established accounting practices documented in authoritative sources such as the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360 for Property, Plant, and Equipment.