Depreciation Calculator

How the Depreciation Calculator works

Use this calculator when you want to compare how an entered cost, salvage value, useful life, method, and first-year convention change a planning schedule. Use Business Loan when borrowing cost matters, Margin when the asset cost feeds pricing, ROI when depreciation is part of a return comparison, Payback Period when cash recovery timing is the question, and official tax or accounting-standard sources when a real filing, financial statement, asset class, or policy decision depends on the result.

The app caps salvage value at asset cost, then calculates depreciable basis = max(0, asset cost - salvage value). Depreciation years are rounded to a whole number and floored at 1. Straight-line mode uses basis / years for each full year, capped at the remaining amount above salvage value. Declining-balance mode uses beginning book value * depreciation factor / years, also capped at salvage value. Sum-of-years-digits mode uses basis * remaining life / (years * (years + 1) / 2). If partial-year depreciation is on, only the first displayed year is multiplied by the selected day, full-month, half-month, full-quarter, half-quarter, or half-year percentage. If Round to dollars is Yes, each displayed annual depreciation amount is rounded before the next book value is calculated.

Depreciation Calculator formula

This formula page covers the app's Depreciation Calculator: a generic book-value schedule for asset cost, salvage value, useful life, straight-line depreciation, declining-balance depreciation, sum-of-years-digits depreciation, optional first-year partial conventions, and display rounding. It does not determine tax depreciation, MACRS, capital allowances, asset classes, bonus depreciation, section allowances, filing forms, official accounting policy, impairment, disposal, or depreciation recapture.

Step by step

1. Cap salvage value at asset cost, then calculate depreciable basis as max(0, asset cost minus salvage value).
2. Round Depreciation years to a whole number and floor it at 1 before building the schedule.
3. For straight-line mode, use basis divided by useful life for each full year, capped so book value does not fall below salvage value.
4. For declining-balance mode, divide the depreciation factor by useful life, multiply that rate by beginning book value, and cap the result at the remaining amount above salvage value.
5. For sum-of-years-digits mode, divide the remaining-life number by n * (n + 1) / 2, multiply that fraction by basis, and cap the result at the remaining amount above salvage value.
6. When partial-year depreciation is enabled, calculate a first-year percentage from the selected day, full-month, half-month, full-quarter, half-quarter, or half-year convention. Apply that percentage only to the first displayed year.
7. If Round to dollars is yes, round each displayed annual depreciation amount to whole dollars before the next book value is calculated. Otherwise, preserve cents.
8. Subtract the displayed-year depreciation from book value and floor the ending book value at salvage value.
9. Expose year 1 through year 5 depreciation and book values. The Total depreciation, Final year depreciation, and Final book value outputs are based on those first five displayed rows, not necessarily the full asset life or an extra catch-up year after partial-year depreciation.
10. Use the formula version, deterministic fixtures, and independent comparator validation as evidence for the generic book-value math, while sending tax and accounting-standard claims to official sources.

Worked example

Default examples: $11,000 cost, $1,000 salvage, 5 years

The default calculator inputs use an $11,000 asset cost, a $1,000 salvage value, a 5-year useful life, a factor of 2, and no partial-year depreciation. That creates a $10,000 depreciable basis.

1. Straight-line mode divides the $10,000 basis by 5 years, so each full displayed year is $2,000 and the fifth displayed book value is $1,000.
2. Declining-balance mode with factor 2 uses a 40 percent rate because 2 divided by 5 is 0.40. The unrounded fixture depreciates $4,400, $2,640, $1,584, $950.40, and $425.60, then stops at the $1,000 salvage value.
3. Sum-of-years-digits mode uses a denominator of 15 because 5 + 4 + 3 + 2 + 1 = 15. The first-year fraction is 5/15, so first-year depreciation is $3,333.33 before later years step down.
4. With half-year partial depreciation in straight-line mode, first-year depreciation is $1,000 instead of $2,000. Rows 2 through 5 still show $2,000 each, so the five displayed rows total $9,000 and end at a $2,000 book value.
5. That partial-year result illustrates why the displayed total and final book value should be read as first-five-row outputs rather than a complete tax or accounting schedule.

The calculator is useful for comparing depreciation timing under the entered assumptions. It does not decide the right accounting policy, tax method, asset class, recovery period, or filing treatment for a real asset.

Assumptions and what this calculator ignores

Geographic scope: works globally. The math is currency-agnostic, so enter amounts in your own currency; local taxes, fees, and product rules are not included.

• This is a generic book-value model. It does not choose asset class, useful life, residual value, tax recovery period, MACRS convention, section 179 treatment, special or bonus depreciation, annual investment allowance, writing-down allowance, capital allowance treatment, impairment, disposal treatment, or accounting policy.
• The public output exposes five schedule rows. Total depreciation, Final year depreciation, and Final book value are based on those first five displayed rows, which can differ from a full-life schedule when useful life is longer than 5 years or partial-year depreciation leaves unrecovered basis after row 5.
• Scoped independent comparator checks pass 4 of 4 scoped fixtures for straight-line, declining-balance, sum-of-years-digits, and one half-month partial-year scenario. Tax depreciation needs official tax authority sources, accounting-standard claims need primary accounting-standard materials, and results are educational estimates, not financial, tax, legal, accounting, filing, investment, lending, or personalised business advice.

What this formula does not include

• This is a generic book-value model. It is not a tax depreciation, accounting-standard, audit, filing, or legal determination.
• The calculator does not choose asset class, useful life, residual value, depreciation method, tax recovery period, MACRS convention, section 179 treatment, bonus depreciation, annual investment allowance, writing-down allowance, or capital allowance treatment.
• Tax depreciation and capital-allowance claims need official sources such as IRS Publication 946 for US tax context or GOV.UK/HMRC capital allowances for UK tax context.
• Accounting-standard claims need relevant primary accounting sources, such as IFRS IAS 16 or applicable FASB Accounting Standards Codification material. This page does not state that the calculator complies with any reporting standard.
• The public output exposes five schedule rows. Total depreciation, final year depreciation, and final book value are calculated from those first five displayed rows, which can differ from a full-life schedule when useful life is longer than 5 years or partial-year depreciation leaves unrecovered basis after row 5.
• The model does not include units-of-production depreciation, component depreciation, impairment, revaluation, maintenance costs, financing costs, disposal proceeds, sale gains or losses, depreciation recapture, inflation, cash flow, or book-tax differences.
• Partial-year conventions are simplified first-year percentages. Real tax or accounting conventions can depend on jurisdiction, placed-in-service rules, asset type, fiscal period, and policy choices.
• Rounding each displayed annual amount to whole dollars can produce a different path from a full-precision schedule. Unrounded mode preserves cents for accelerated depreciation calculations.
• Scoped independent comparator checks currently pass 4 of 4 scoped fixtures for straight-line, declining-balance, sum-of-years-digits, and one half-month partial-year scenario. Validation compares the first and fifth displayed schedule rows plus annual depreciation where available.
• The result is an educational estimate from the entered assumptions, not financial, tax, legal, accounting, investment, lending, or personalised business advice.

Common mistakes to avoid

• Reading the five displayed schedule rows as a complete tax or accounting depreciation schedule when the selected useful life or partial-year convention can require more context.
• Using declining-balance or sum-of-years-digits timing as if it proves the right tax method, asset class, recovery period, section allowance, capital allowance, reporting policy, impairment treatment, or disposal outcome.
• Confusing depreciation expense with cash leaving the business. The calculator allocates entered asset cost over displayed years; it does not model purchase financing, maintenance cost, market value, cash flow, sale proceeds, or depreciation recapture.

Key terms

Depreciable basis

The nonnegative amount allocated across the schedule. In this calculator, it is max(0, asset cost minus salvage value), after salvage value is capped at asset cost.

Ending book value

The displayed value after subtracting that year's depreciation. The calculator floors book value at salvage value and reports ending book value for years 1 through 5.

Partial-year convention

The selected first-year percentage applied when depreciation starts mid-year. The app applies the selected convention only to the first displayed year; real tax and accounting conventions can depend on official rules and policy choices.

Frequently asked questions

Methodology, sources, and disclaimer

This calculator is an original book-value scheduler implementing straight-line, declining-balance with a selectable factor, and sum-of-years-digits methods with salvage-floor clamping and optional partial-first-year conventions, validated by deterministic fixtures. It is not copied from a single source.

Fixtures pin full year-by-year schedules for all three methods on the $11,000-cost default, including salvage-floor truncation in accelerated methods. The result remains an educational estimate, not tax depreciation or an accounting-standard determination.

Formula version 2026.05.22-generic-depreciation. The version marks the calculation logic and validation fixture set used for this estimate.

• IRS Publication 946 should be used for US tax depreciation, MACRS, section 179, bonus depreciation, asset classes, conventions, forms, and recovery periods.
• GOV.UK and HMRC capital allowances guidance should be used for UK tax relief, annual investment allowance, writing-down allowance, and business tax examples.
• IFRS IAS 16 and relevant FASB Accounting Standards Codification sources should be used when claims discuss accounting-standard treatment, residual value, useful life review, component depreciation, impairment, or financial-statement policy.

Results are educational estimates, not advice. Read the full disclaimer.

Related reading

• How Calcs.finance validates calculator formulas

When another calculator fits better