Depreciation Calculator
Calculate asset depreciation using four different methods: Straight Line, Declining Balance, Sum-of-Years' Digits, and Units of Production. This calculator helps estimate depreciation for accounting and tax purposes.
Depreciation Results
| Depreciation Method | - |
|---|---|
| Asset Cost | $0.00 |
| Salvage Value | $0.00 |
| Depreciable Amount | $0.00 |
| Useful Life | 0 years |
| Annual Depreciation | $0.00 |
| Total Depreciation | $0.00 |
About Depreciation Calculator
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. It represents how much of an asset's value has been used up. Businesses depreciate assets for both tax and accounting purposes, which reduces the taxable income while showing the reduction in value of the asset on the balance sheet.
Depreciation Methods
This calculator supports four common depreciation methods:
1. Straight Line Depreciation
The simplest and most commonly used method. It allocates an equal amount of depreciation each year over the asset's useful life.
Formula: (Asset Cost - Salvage Value) / Useful Life
2. Declining Balance Depreciation
An accelerated depreciation method that writes off more of the asset's value in the early years. The rate is usually a multiple of the straight-line rate (e.g., 200% for double declining balance).
Formula: Book Value at Beginning of Year × Depreciation Rate
3. Sum-of-Years' Digits Depreciation
Another accelerated depreciation method that uses a fraction based on the sum of the years' digits to allocate higher depreciation in earlier years.
Formula: (Remaining Life / Sum of the Years' Digits) × (Asset Cost - Salvage Value)
4. Units of Production Depreciation
Allocates depreciation based on actual usage or production rather than time. Useful for assets where wear and tear is more closely tied to usage than time.
Formula: (Asset Cost - Salvage Value) × (Units Produced in Year / Total Estimated Units)
Why Depreciation Matters
Depreciation is important for:
- Accurately reflecting the decreasing value of assets on financial statements
- Calculating tax deductions for asset wear and tear
- Determining the true cost of doing business
- Making informed decisions about asset replacement