How this calculator works
Depreciation spreads the cost of an asset over its useful life instead of expensing it all at once. This calculator supports the two most widely taught methods: straight-line, which deducts the same amount every year, and declining balance, which deducts a larger share early on and less as the asset ages.
Both methods produce a year-by-year table of the depreciation expense, accumulated depreciation, and remaining book value, so you can see exactly how the asset's value on the books changes over time under each approach.
The formulas
Straight-line: Annual depreciation = (Cost − Salvage value) ÷ Useful lifeDeclining balance: Rate = Factor ÷ Useful life (150% or 200%/double-declining); each year's expense = Book value × RateThis calculator applies the declining-balance rate every year and simply stops once book value reaches salvage value (it floors there, never going lower). It does not switch to straight-line partway through, which is a different, commonly taught convention ("declining balance with straight-line crossover") that can produce a larger total write-off over the same life. Because of that, a low declining-balance rate over a short life can leave book value above salvage at the end of the schedule — that is expected behavior for the plain method used here, not a rounding error.
Worked example: $10,000 asset, $1,000 salvage, 5-year life
- Straight-line: annual depreciation = (10,000 − 1,000) ÷ 5 = $1,800 every year, reaching exactly $1,000 book value after year 5.
- 200% declining balance: rate = 200% ÷ 5 = 40% of book value each year. Year 1 = 10,000 × 0.40 = $4,000, leaving $6,000.
- Year 2 = 6,000 × 0.40 = $2,400 (book value $3,600); year 3 = $1,440 (book value $2,160); year 4 = $864 (book value $1,296).
- Year 5 would normally be 1,296 × 0.40 = $518.40, but that would take book value to $777.60, below the $1,000 salvage floor — so year 5 is capped at $296, landing exactly at $1,000.
Frequently asked questions
Which method should I use?
Straight-line is simpler and most common for financial reporting on assets that lose value evenly, like furniture or buildings. Declining balance is often used for assets, such as vehicles or computers, that lose most of their value early and for accelerated tax depreciation schedules.
Why does declining balance sometimes not reach the salvage value?
The declining-balance rate is a fixed percentage of a shrinking book value, so it approaches salvage value asymptotically rather than hitting it on a schedule. Over a short useful life or at a low factor (150% rather than 200%), book value can end above salvage — this calculator floors depreciation at salvage but does not force the full write-off.
What is the difference between 150% and 200% declining balance?
The factor sets the rate as a multiple of the straight-line rate: 200% (double-declining balance) uses twice the straight-line rate, while 150% uses one and a half times it, resulting in a slower front-loaded write-off.
Does this calculator handle tax depreciation rules like MACRS?
No. Government tax depreciation systems, such as the US MACRS tables, use specific recovery periods, half-year conventions, and fixed percentage tables that differ from the textbook straight-line and declining-balance formulas used here. Use this calculator for the general concept and consult official tax tables or a tax professional for filing purposes.
What happens if I set the salvage value to $0?
Straight-line depreciation simply becomes cost ÷ useful life with nothing subtracted first — the $10,000, 5-year example would depreciate $2,000 a year instead of $1,800. For declining balance, the floor this calculator stops at becomes $0 instead of a salvage amount, so it keeps applying the rate to the shrinking book value each year until it reaches (or is capped at) zero rather than stopping early.