Depreciation Calculator

Depreciation spreads an asset's depreciable base — cost minus salvage value — across the periods that use it. Three inputs drive every method: cost $C$, salvage (residual) value $S$, and useful life $L$.

Straight-line charges the same amount every year:

$D = \frac{C - S}{L}$

Declining balance applies a fixed rate to the book value, which shrinks each year, so the charge front-loads:

$\text{rate} = \frac{k}{L}, \qquad D_t = B_{t-1} \times \text{rate}, \qquad B_t = B_{t-1} - D_t$

with $k = 2$ for double declining balance and $k = 1.5$ for the 150% variant. Note the crucial asymmetry: declining balance ignores salvage in the rate, so you must stop once book value reaches $S$.

Units of production ties the charge to usage rather than time:

$D = \frac{C - S}{\text{total estimated units}} \times \text{units this period}$

All three converge on the same total, $C - S$; they differ only in how that total is distributed across the years.

Book value and accumulated depreciation

$\text{accumulated}_t = \sum_{j=1}^{t} D_j, \qquad B_t = C - \text{accumulated}_t$

Under straight-line this collapses to $B_t = C - tD$; under declining balance it is $B_t = C(1 - \text{rate})^t$, until the salvage floor bites.

Solving for a rate

Given a starting value, an ending value and a life, the constant annual rate that connects them is

$\text{rate} = 1 - \left(\frac{B_L}{C}\right)^{1/L}$

This is the depreciation twin of a CAGR, and it is how you back out the implied rate from a published value table.

Which method applies

Straight-line suits assets that wear evenly with time; declining balance suits assets that lose most value early; units of production suits machinery whose wear tracks output. Which one you are permitted to use for tax purposes — and any prescribed rate tables or conventions — is set by the accounting standards and tax rules of your jurisdiction, and those change. This page computes any method exactly on the figures you give it; it does not select a method for you or provide tax guidance.

• Subtracting salvage in declining balance: the rate is applied to full book value, starting from $C$, not from $C - S$. Salvage acts only as a floor.
• Depreciating past salvage: once $B_t$ would fall below $S$, the final charge is trimmed to $B_{t-1} - S$ and depreciation stops.
• Using the rate on cost every year: declining balance multiplies the current book value. Applying the rate to $C$ every year is straight-line with an odd rate.
• Confusing rate with life: $2/L$ is the DDB rate, so a 5-year life gives $40\%$, not $20\%$.
• Forgetting the salvage estimate entirely: leaving $S$ out of straight-line overstates the annual charge by $S/L$.
• Mixing units and time: units of production takes the units used, not the fraction of the life elapsed.
• Expecting the totals to differ: every method totals $C - S$ over the full life. Only the timing changes.