How to use the Depreciation Calculator
- Enter the asset's total capitalised cost, including delivery and installation.
- Enter the estimated salvage value at the end of its useful life.
- Enter the useful life in years.
- Select the year you want to examine to compare methods for that period.
How the calculation works
Straight-line spreads the depreciable base evenly and is the default for financial reporting because it is simple and smooths earnings. Double declining balance front-loads the expense at twice the straight-line rate applied to declining book value, which better matches assets that lose most value early — vehicles and computing equipment especially.
Sum-of-years-digits is a middle path: it accelerates the expense but on a linear declining schedule rather than a geometric one, so it is gentler than DDB while still recognising early value loss.
Book depreciation and tax depreciation are separate systems. US tax uses MACRS with prescribed recovery periods and conventions, and Section 179 or bonus depreciation may allow immediate expensing, so never file from a book schedule.
SL = (cost − salvage) ÷ life; DDB = book × 2 ÷ life; SYD = (life − year + 1) ÷ [life(life+1)/2] × (cost − salvage)Source: FASB ASC 360 Property, Plant and Equipment; IRS Publication 946 for MACRS tax depreciation.
Worked example
A $50,000 asset with $5,000 salvage over 5 years, year 1.
- Straight-line: (50,000 − 5,000) ÷ 5 = $9,000.
- DDB: 50,000 × 40% = $20,000.
- SYD: 5/15 × 45,000 = $15,000.
Year one expense ranges from $9,000 to $20,000 depending on method — a material earnings difference.
Frequently asked questions
Which method should I use?+
Straight-line for reporting simplicity, an accelerated method where the asset genuinely loses value fast or where early expense recognition is preferred.
Can book value fall below salvage?+
No. Depreciation stops once book value reaches salvage under every method.
How is land treated?+
Land is not depreciated. Buildings and improvements on it are, over separate recovery periods.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.