Calculate asset depreciation using all 3 standard methods: Straight Line, Declining Balance, and Sum of Years' Digits. Generate professional depreciation schedules for accounting and tax purposes.
Calculating depreciation schedule...
Asset depreciation is the allocation of an asset's cost over its useful life for accounting and tax purposes. It recognizes that most business assets lose value over time due to wear, tear, obsolescence, or other factors. Proper depreciation calculation is essential for accurate financial reporting and tax compliance.
Our free depreciation calculator supports all three major depreciation methods accepted by accounting standards and tax authorities, helping you determine the most appropriate method for your specific assets and business needs.
The simplest and most commonly used method. Depreciates the asset by an equal amount each year over its useful life.
Accelerated depreciation method that applies a fixed percentage to the asset's book value each year.
Accelerated method that depreciates more in early years using a fraction based on remaining useful life.
The choice depends on your asset type and business needs. Straight line is simplest and most common. Declining balance and sum of years provide larger deductions in early years, which can be beneficial for tax planning and assets that lose value quickly.
Salvage value is the estimated value of an asset at the end of its useful life. It's the amount you expect to receive when you dispose of or sell the asset. For tax purposes, salvage value is often set to zero.
Useful life is typically determined by IRS guidelines, manufacturer specifications, or your experience with similar assets. Common examples: computers (3-5 years), vehicles (5 years), office furniture (7 years), buildings (27.5-39 years).
This calculator provides accurate depreciation calculations using standard methods. However, always consult with a tax professional or accountant for specific tax situations, as tax laws may have additional requirements or limitations.
Annual Depreciation = (Asset Cost - Salvage Value) ÷ Useful Life
Asset: Computer System
Cost: $3,000
Salvage Value: $300
Useful Life: 3 years
Annual Depreciation: $900
Asset: Production Machine
Cost: $50,000
Salvage Value: $5,000
Useful Life: 10 years
Annual Depreciation: $4,500
Asset: Delivery Truck
Cost: $40,000
Salvage Value: $8,000
Useful Life: 8 years
Annual Depreciation: $4,000
| Method | Calculation | Depreciation Pattern | Best For | Tax Benefits |
|---|---|---|---|---|
| Straight Line | (Cost - Salvage) ÷ Life | Equal amounts each year | Buildings, furniture, general equipment | Consistent annual deduction |
| Declining Balance | Book Value × Rate | Higher early years | Technology, vehicles, machinery | Larger early deductions |
| Sum of Years | Fraction × Depreciable Base | Decreasing each year | Assets with declining productivity | Accelerated early benefits |
Depreciation reduces your taxable income dollar-for-dollar, providing immediate tax savings each year.
Allows immediate expensing of qualifying assets up to $1,160,000 (2023 limit) instead of depreciating over time.
Additional first-year depreciation allowance for qualifying property, currently 80% for 2023.
Depreciation is a non-cash expense that reduces taxes while preserving cash flow for business operations.
Use accelerated methods for assets that lose value quickly, straight-line for consistent assets.
Keep detailed records of asset purchases, improvements, and disposal dates for accurate calculations.
Asset purchases late in the year may qualify for full-year depreciation depending on the method used.
When selling assets, gain or loss is calculated based on the depreciated book value, not original cost.
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