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Depreciation Calculator

Work out the yearly depreciation and book value of an asset using the straight line or declining balance method. Enter the details and press Calculate.

Written by TopicDrill Editorial Team·Updated June 2026

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Asset details

Fill in the details, then press Calculate.

$
$

First year depreciation

$5,400

Total depreciation$27,000
Average per year$5,400
Ending book value$3,000

Book value over time

$0$8k$15k$23k$30k0 yr3 yr5 yr

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How depreciation works

When a business buys equipment, vehicles or machinery, it usually does not expense the whole cost in one year. Instead it spreads the cost across the asset's useful life. That yearly charge is depreciation, and it lowers the asset's recorded value, or book value, a little each year.

Two methods cover most situations. Straight line splits the depreciable base evenly across the years. Declining balance front-loads the expense by applying a fixed rate to the shrinking book value, which suits assets that lose value fastest when they are new.

A quick example

Buy a $30,000 asset with a $3,000 salvage value and a 5 year life. Straight line gives ($30,000 − $3,000) / 5 = $5,400 of depreciation every year, ending at the $3,000 salvage value. The double declining method would charge more in year one and taper off, as the chart above shows.

Things to keep in mind

The right method and useful life can depend on accounting rules and tax law in your country, and tax depreciation often differs from book depreciation. Treat this as an estimate and confirm specifics with a qualified accountant or the IRS. For other money math, browse our free calculators.

Frequently asked questions

What is depreciation?

Depreciation spreads the cost of a long-lived asset across the years you use it, instead of expensing it all at once. It reflects wear, age and obsolescence, and it lets businesses match the cost of an asset to the income it helps produce.

How does straight line depreciation work?

Straight line charges the same amount every year. You subtract the salvage value from the cost to get the depreciable base, then divide by the useful life. It is the simplest method and the most common for financial reporting.

What is declining balance depreciation?

Declining balance applies a fixed rate to the remaining book value each year, so the expense is largest early and shrinks over time. Double declining balance uses a rate of 2 divided by the useful life. Depreciation stops once book value reaches the salvage value.

What is salvage value?

Salvage value, also called residual value, is the amount you expect the asset to be worth at the end of its useful life. Depreciation never takes the book value below this figure, since you still expect to recover that much when you dispose of the asset.

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