Asset Depreciation Calculator

Enter your asset cost, salvage value, useful life, and depreciation method to calculate annual expense, total depreciation, and a full year-by-year schedule.

Created by Luis GonzalezLast updated: June 16, 2026

How to Use This Calculator

1
Enter Asset Details
Input the initial cost, salvage value, useful life in years, and select a depreciation method (Straight-Line, Declining Balance, or Sum of the Years Digits).
2
Review Results
See Year 1 Depreciation, Total Depreciation, and Final Book Value cards. The Insights panel shows average annual expense, cost recovery rate, depreciation rate, depreciable basis, method details, and midpoint book value. A full year-by-year schedule appears below.

Example Calculation

A business calculates depreciation for a $10,000 machine with $1,000 salvage value and 5-year useful life using the Straight-Line method.

Initial Cost of Asset ($)

10,000

Salvage Value ($)

1,000

Useful Life (yrs)

Depreciation Method

Straight-Line

Results

Year 1 Depreciation

$1,800

Total Depreciation

$9,000

Final Book Value

$1,000

Insights card shows $1,800 average annual expense, 90% cost recovery, 18% depreciation rate, and $9,000 depreciable basis.

Tips

$1,800/Year Is 18% of Cost — Declining Balance Would Deduct $4,000 in Year 1

Straight-Line spreads $9,000 evenly at $1,800/year. Declining Balance front-loads 40% of book value each year — Year 1 deducts $4,000 (2.2x more), then $2,400, $1,440, $864, and $296. Same total, very different timing for tax benefits.

90% Cost Recovery Means $1,000 Stays on the Books Forever as Salvage

Only $9,000 of the $10,000 cost is depreciable. The $1,000 salvage value remains as book value indefinitely. If salvage were $0, you'd recover 100% — an extra $200/year in deductions ($1,000 / 5 years).

At 25% Tax Rate, Each $1,800 Deduction Saves $450 in Taxes Annually

Depreciation reduces taxable income. With Declining Balance, the Year 1 tax saving would be $1,000 ($4,000 x 25%) instead of $450 — a $550 cash flow advantage in Year 1, offset by smaller deductions in later years.

Sum-of-Years-Digits: $3,000 Year 1, Decreasing by $600 Each Year

SYD uses weights 5/15, 4/15, 3/15, 2/15, 1/15 on the $9,000 depreciable basis. Year 1 = $3,000, Year 2 = $2,400, Year 3 = $1,800, Year 4 = $1,200, Year 5 = $600. Moderate acceleration between Straight-Line and Declining Balance.

How Much Does Your Asset Lose in Value Each Year?

The Asset Depreciation Calculator computes annual depreciation using three methods — Straight-Line, Declining Balance, and Sum-of-the-Years-Digits. For a $10,000 machine with $1,000 salvage value over 5 years, Straight-Line produces $1,800 per year, totaling $9,000 in depreciation and a final book value of $1,000. The full year-by-year schedule shows how book value declines from $10,000 to $1,000.

The Three Depreciation Methods

Each method spreads the same total cost differently across years:

Straight-Line: Annual = (Cost - Salvage) / Useful Life
Declining Balance: Annual = (2 / Useful Life) x Beginning Book Value
Sum-of-Years-Digits: Annual = (Remaining Life / SYD) x (Cost - Salvage)
  where SYD = Useful Life x (Useful Life + 1) / 2

💡 To understand how depreciation affects your overall asset health and whether impairment is needed, our Asset Impairment Loss Calculator compares book value to recoverable amount.

Example: $10,000 Machine Over 5 Years

$10,000 cost, $1,000 salvage, 5-year life — comparing all three methods:

Year	Straight-Line	Declining Balance	Sum-of-Years-Digits
1	$1,800	$4,000	$3,000
2	$1,800	$2,400	$2,400
3	$1,800	$1,440	$1,800
4	$1,800	$864	$1,200
5	$1,800	$296	$600
Total	$9,000	$9,000	$9,000
Final Book Value	$1,000	$1,000	$1,000

All three methods produce the same $9,000 total depreciation and $1,000 final book value. The difference is timing: Declining Balance front-loads 44% of total depreciation into Year 1, SYD loads 33%, and Straight-Line distributes an even 20% per year.

💡 For evaluating the complete cost of owning an asset beyond just depreciation — including maintenance, insurance, and opportunity costs — our Total Cost of Ownership (TCO) Calculator provides a full financial picture.

Choosing the Right Method

Straight-Line is simplest and best when assets produce consistent value over their life (buildings, furniture). Declining Balance maximizes early deductions — ideal for technology and equipment that loses value rapidly, providing better early tax benefits. Sum-of-Years-Digits offers moderate acceleration between the two. At a 25% tax rate on this $10,000 asset, Declining Balance saves $1,000 in Year 1 taxes vs $450 for Straight-Line — a $550 cash flow advantage that gradually reverses in later years.

Frequently Asked Questions

What is asset depreciation?

Allocating an asset's cost over its useful life as an annual expense. A $10,000 machine with $1,000 salvage and 5-year life has $9,000 depreciable basis — $1,800/year under Straight-Line. It reduces the asset's book value on the balance sheet and creates a tax-deductible expense.

What is salvage value?

The estimated residual value at end of useful life. With $1,000 salvage, the machine can't be depreciated below $1,000 book value. Higher salvage means less total depreciation ($8,000 depreciable basis at $2,000 salvage vs $9,000 at $1,000 salvage).

When should I use an accelerated method?

When assets lose more value early (technology, vehicles) or you want larger tax deductions upfront. Declining Balance deducts $4,000 in Year 1 vs $1,800 for Straight-Line — same total over 5 years but better cash flow timing at a 25% tax rate, the difference is $550 in Year 1 tax savings.

How does Declining Balance work?

Double Declining Balance uses rate = 2 / useful life (40% for 5-year assets). Apply 40% to beginning book value each year: $10,000 x 40% = $4,000, then $6,000 x 40% = $2,400, etc. The final year adjusts to reach salvage value exactly.

What is Sum-of-the-Years-Digits?

SYD = years x (years + 1) / 2 = 15 for a 5-year asset. Each year's fraction = remaining life / SYD applied to the depreciable basis. Year 1: 5/15 x $9,000 = $3,000. Year 5: 1/15 x $9,000 = $600. Provides moderate acceleration.

Can I change depreciation methods?

Under GAAP, you can change methods if the new method better reflects the asset's pattern of economic benefit. The change is applied prospectively (going forward, not retroactively). Under IFRS, methods should be reviewed annually. Tax authorities may have separate rules — IRS MACRS elections are generally irrevocable.