Calculate asset depreciation using straight-line, double declining balance or sum-of-years-digits. See annual depreciation, accumulated depreciation and book value for each year.
Enter asset cost, salvage value, useful life and choose your depreciation method to see the full annual depreciation schedule.
Press Calculate. All results appear instantly in your browser with no data sent to any server.
See your complete breakdown with all key figures and percentages. Use Copy or Download to save results for your records.
Depreciation is the systematic allocation of an asset cost over its useful life. Rather than expensing the full cost in year one, businesses spread it across the years the asset generates revenue. Depreciation reduces taxable profit and appears as an expense on the income statement. The asset book value on the balance sheet decreases each year by the annual depreciation amount.
Straight-line depreciation spreads cost evenly across the useful life. Formula: Annual Depreciation = (Cost - Salvage Value) / Useful Life. For an asset costing 50,000 dollars with 5,000 dollars salvage value over 5 years: Annual Depreciation = (50,000 - 5,000) / 5 = 9,000 dollars per year. The book value decreases by 9,000 dollars each year until reaching the salvage value.
Double declining balance (DDB) front-loads depreciation — more is expensed in early years. The annual rate is (1/Useful Life) x 2. For a 5-year asset: rate = 40%. Year 1: 50,000 x 40% = 20,000 dollars. Year 2: 30,000 x 40% = 12,000 dollars. DDB reflects that many assets (vehicles, technology) lose value faster when new and provides greater tax deductions in early years.
Sum-of-years-digits (SYD) is an accelerated method between straight-line and DDB. For a 5-year life: sum = 5+4+3+2+1 = 15. Year 1 fraction = 5/15; Year 2 = 4/15; Year 3 = 3/15, and so on. Annual Depreciation = (Cost - Salvage) x (Remaining Years / SYD). SYD provides higher early deductions than straight-line but depreciates more gradually than DDB.
Salvage value is the estimated value of an asset at the end of its useful life. Depreciation is calculated only on the depreciable base: Cost minus Salvage Value. If you expect to sell a machine for 5,000 dollars after 5 years, only the 45,000 dollars above salvage value is depreciated. Overestimating salvage value reduces annual depreciation and increases taxable profit in each year.
Straight-line suits assets with steady useful value (buildings, furniture, fixtures) and simplifies bookkeeping. Declining balance and SYD suit assets that lose value quickly in early years (vehicles, computers, technology equipment) and provide tax advantages through higher early deductions. In the UK, HMRC capital allowances rules may override your accounting choice for tax purposes.
Capital allowances allow UK businesses to deduct the cost of qualifying capital assets from taxable profits. The Annual Investment Allowance (AIA) lets businesses deduct the full cost of most plant and machinery (up to 1 million pounds per year) in the year of purchase. Writing Down Allowances of 18% or 6% apply to items above the AIA limit. Capital allowances replace accounting depreciation for UK tax purposes.
Book value is the asset value on the balance sheet — original cost minus accumulated depreciation. Market value is what the asset would actually sell for today. These often diverge significantly. A vehicle with a 20,000 dollar book value might only sell for 12,000 dollars if the market declines faster than depreciation assumed. Impairment testing checks whether book value exceeds the recoverable amount.
