Depreciation Calculator
Calculate straight-line depreciation
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Need to calculate straight-line depreciation? Depreciation Calculator answers in seconds. You supply Asset Cost, Salvage Value and Useful Life (years) to Depreciation; the answer follows at once. Nothing in Depreciation is a black box. Depreciation shines when speed matters. Depreciation is privacy-first: Business inputs stay offline. Depreciation is part of the Business collection on CalcProMaster, alongside free depreciation calculator, free online depreciation calculator and more. Depreciation shows formula, assumptions and result together. Open Depreciation and enter your numbers. Depreciation is linked from the Business hub page.
What the defaults give
Cost $50,000, salvage $5,000, useful life 5 years: $9,000 of depreciation a year on the straight-line method.
The depreciable base is the cost minus salvage — $45,000 — not the full purchase price, because the asset is expected to be worth $5,000 at the end.
The straight-line depreciation formula
Straight-line spreads the loss in value evenly over the asset’s life:
Annual depreciation = (Asset cost − Salvage value) ÷ Useful life
A $50,000 asset with a $5,000 salvage value over 5 years: (50,000 − 5,000) ÷ 5 = $9,000 per year.
| Year | Opening value | Depreciation | Closing value |
|---|---|---|---|
| 1 | $50,000 | $9,000 | $41,000 |
| 2 | $41,000 | $9,000 | $32,000 |
| 3 | $32,000 | $9,000 | $23,000 |
| 4 | $23,000 | $9,000 | $14,000 |
| 5 | $14,000 | $9,000 | $5,000 |
Straight-line gives an equal charge each year; accelerated methods front-load it. Related: business depreciation and business calculators.
The formula
Annual depreciation = (cost − salvage value) ÷ useful life.
(50,000 − 5,000) ÷ 5 = 45,000 ÷ 5 = $9,000 per year. After five years the book value is $5,000, exactly the salvage assumption.
The schedule
Year 1: book value $41,000
Year 2: $32,000
Year 3: $23,000
Year 4: $14,000
Year 5: $5,000
Straight line versus the alternatives
- Straight line spreads the cost evenly — simplest, and the default in most accounting.
- Declining balance takes a fixed percentage of the opening book value each year, so early years carry more. At double-declining on this asset, year one would be $20,000, falling thereafter.
- Sum-of-the-years’-digits allocates 5/15 of the base to year one and 1/15 to year five, a gentler acceleration than declining balance.
- Units of production ties the charge to output — the right method for a machine whose life is measured in hours, not years.
Why the method matters
The total charge over the asset’s life is identical under every method. What changes is the timing: an accelerated method front-loads the expense, lowering early profit and tax and raising later ones. For a capital-intensive business the choice can move reported earnings noticeably between years.
What this does not model
Tax depreciation rules are usually set by statute and rarely match accounting depreciation — bonus depreciation, section 179 elections and class lives all change the deductible amount. Book depreciation and tax depreciation are two separate schedules.
Frequently Asked Questions
Why is the annual charge $9,000 and not $10,000?
Because the $5,000 salvage value is not depreciated. The base is $50,000 − $5,000 = $45,000, spread over five years.
What is the book value after three years?
Three years of $9,000 is $27,000 of accumulated depreciation, so $50,000 − $27,000 = $23,000.
When should I use declining balance instead?
When the asset loses value faster early — vehicles, computers and machinery. It matches the expense to the periods that benefit most from the asset.
Does depreciation affect cash flow?
Not directly. It is a non-cash expense, so it reduces reported profit and tax but does not move cash. That is why it is added back in a cash-flow statement.
What is salvage value in practice?
The estimated resale or scrap value at the end of the useful life. It is an estimate, and a large salvage figure lowers every year’s depreciation.
What is the book value after four years?
Four years at $9,000 is $36,000 accumulated, leaving $50,000 − $36,000 = $14,000. After the fifth year it reaches exactly the $5,000 salvage assumption, which is the check that the schedule is complete.
How do I convert this to a monthly charge?
Divide by twelve: $9,000 a year is $750 a month. Monthly depreciation matters for management accounts and for any rental or cost-per-unit calculation, where the annual charge is too coarse to be useful.
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