Depreciation Calculator with Schedule (Straight-Line & Declining Balance)

Calculating the depreciation of your business assets is essential for accurate financial statements and tax deductions. Use our Depreciation Calculator to easily generate a year-by-year schedule showing how an asset loses value over its functional lifespan.

Depreciation Calculator

Calculate asset depreciation using the Straight Line, Declining Balance, or Sum of the Year's Digits methods, with options for partial-year calculation.

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Partial Year Depreciation?

How to Use Our Depreciation Calculator

 

To calculate an asset’s depreciation schedule, provide the following information. These details are typically found in your accounting records or purchase documents.

  • Initial Cost of Asset: Enter the total cost to acquire the asset, including any shipping, setup, and installation fees.

  • Salvage Value: This is the estimated resale or scrap value of the asset at the end of its useful life. If you expect it to be worthless, you can enter $0.

  • Useful Life (Years): Enter the number of years you expect the asset to be in service for your business. The IRS provides guidelines for the useful life of various asset classes.

  • Depreciation Method: Choose the accounting method you want to use.

    • Straight-Line: The simplest and most common method. It spreads the depreciation expense evenly across each year of the asset’s useful life.

    • Double Declining Balance: An accelerated method that records larger depreciation expenses in the early years and less in the later years. This is useful for assets that are most productive when they are new.

    • Sum-of-the-Years’-Digits: Another accelerated method that provides a more aggressive depreciation schedule than Straight-Line but is generally less aggressive than Double Declining Balance.

Understanding Your Results

 

Our calculator doesn’t just give you a single number; it provides a full Depreciation Schedule. This table shows you exactly how the asset’s value changes each year.

Here’s a breakdown of the columns in your results table:

TermDescription
Beginning Book ValueThe value of the asset at the start of the year. For Year 1, this is the Initial Cost.
Depreciation ExpenseThe amount of depreciation recorded for that specific year. This is the figure you can often deduct on your tax return.
Accumulated DepreciationThe total sum of all depreciation expenses recorded for the asset from Year 1 up to the current year.
Ending Book ValueThe asset’s remaining value on your books at the end of the year (Beginning Book Value - Depreciation Expense).

Example Depreciation Schedule (Straight-Line Method): For an asset with an Initial Cost of $50,000, a Salvage Value of $10,000, and a Useful Life of 5 years. The annual depreciation is ($50,000 - $10,000) / 5 = $8,000.

YearBeginning Book ValueDepreciation ExpenseAccumulated DepreciationEnding Book Value
1$50,000$8,000$8,000$42,000
2$42,000$8,000$16,000$34,000
3$34,000$8,000$24,000$26,000
4$26,000$8,000$32,000$18,000
5$18,000$8,000$40,000$10,000

Frequently Asked Questions

 

What is depreciation and why is it important?

 

Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. It represents how much of the asset’s value has been used up in a given period. It’s important for two main reasons:

  1. Financial Reporting: It allows a business to match the asset’s cost to the revenue it helps generate, providing a more accurate picture of profitability on the income statement.

  2. Tax Purposes: Businesses can deduct depreciation expense from their taxable income, which lowers their tax bill.

Straight-Line vs. Double Declining Balance: Which method should I use?

 

The best method depends on the nature of the asset and your financial strategy.

  • Choose Straight-Line for simplicity and consistency. It’s easy to calculate and results in a predictable, stable depreciation expense each year. It’s ideal for assets that lose value evenly over time.

  • Choose Double Declining Balance if the asset is significantly more productive or efficient in its early years (e.g., computer hardware or heavy machinery). This method provides a larger tax deduction in the first few years, which can improve cash flow.

What is “book value” and is it the same as market value?

 

They are not the same.

  • Book Value is an accounting concept. It is the original cost of an asset minus all accumulated depreciation. It’s the value of the asset on your company’s balance sheet.

  • Market Value is the price the asset would actually sell for in the open market. An old company vehicle might have a book value of $1, but its market value (what someone would pay for it) could be $2,000.

Can I depreciate land?

 

No. Land is considered to have an indefinite useful life and does not wear out or become obsolete. Therefore, it cannot be depreciated for accounting or tax purposes. However, buildings and land improvements (like driveways, fences, or landscaping) can be depreciated.

 

What is MACRS and how is it different from these methods?

 

MACRS (Modified Accelerated Cost Recovery System) is the mandatory depreciation system required by the IRS for tax purposes in the United States. While our calculator uses traditional methods (Straight-Line, etc.) common for internal “book” accounting, MACRS is a separate, specific system with its own pre-determined recovery periods and conventions. Businesses must use MACRS for their tax returns, but they often use a method like Straight-Line for their own internal financial statements.

 

What happens if I sell an asset for more than its book value?

 

When you sell an asset, you must compare its sale price to its ending book value.

  • If you sell it for more than its book value, you have a gain on the sale. This gain is typically considered taxable income.

  • If you sell it for less than its book value, you have a loss on the sale, which may be tax-deductible.

Concrete Example: If your asset’s book value is $10,000 and you sell it for $12,000, you have a $2,000 taxable gain.


Take the Next Step in Managing Your Business Finances

 

After calculating depreciation, you can make more informed decisions about your company’s financial health.

Creator

Picture of Huy Hoang

Huy Hoang

A seasoned data scientist and mathematician with more than two decades in advanced mathematics and leadership, plus six years of applied machine learning research and teaching. His expertise bridges theoretical insight with practical machine‑learning solutions to drive data‑driven decision‑making.
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