Depreciation calculator

Formula

How it works

Straight-line spreads cost minus salvage value evenly over the useful life. Double-declining applies twice the straight-line rate to the remaining book value each year, giving larger deductions early, and never goes below salvage value.

Worked example

The same calculation with the default values:

• Method Straight-line
• Asset cost 25,000
• Salvage value 2,500
• Useful life 5 years

1. annual depreciation = (25,000 − 2,500) ÷ 5 = 4,500
2. monthly depreciation = 4,500 ÷ 12 = 375

Result: First-year depreciation: 4,500.00 USD · First-year depreciation per month: 375.00 USD · Depreciable amount (cost − salvage): 22,500.00 USD

Common mistakes

• Using the double-declining-balance result past the point where it would depreciate below the salvage value - most accounting methods stop or switch methods at that point, which this simplified calculator does not automatically do.
• Forgetting that depreciation is an accounting allocation of a cost already paid, not a new cash expense - it doesn't change how much cash is in the bank.
• Applying the same useful-life estimate to very different asset types - a laptop and a building have very different realistic useful lives, and using the wrong one materially skews the annual figure.