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Depreciation Calculator

Choose a method, enter the asset details, and see the complete yearly depreciation schedule.

Asset Details

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yrs
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units
units

First-Year Depreciation

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Total Depreciation
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Ending Book Value
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Effective Annual Rate
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Yearly Depreciation
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The 5 depreciation methods — what they are and why to use them

1. Straight Line Method (SLM)

How it works: Depreciation = (Cost − Salvage Value) ÷ Useful Life. The same amount is written off every year, so the yearly depreciation is constant.

Why use it: It is the simplest method and is best for assets whose service is used evenly every year — buildings, office furniture, leasehold improvements, fixtures. It gives a stable, predictable charge to profit each year, which accountants and small businesses prefer for planning.

2. Written Down Value (WDV) / Diminishing Balance Method

How it works: A fixed percentage rate is applied to the opening book value of each year, not the original cost. Depreciation is therefore high in early years and falls every year as the book value shrinks.

Why use it: Most real assets — vehicles, plant and machinery, electronics, computers — lose far more value in their first years than in their last. WDV matches this reality and it is also the method prescribed for most assets under income-tax rules in India and many other countries, which keeps book and tax depreciation aligned.

3. Double Declining Balance (DDB)

How it works: It is WDV applied at double the straight-line rate (2 ÷ life × 100%). The book value can never fall below the salvage value.

Why use it: Use DDB when an asset loses value even faster than WDV assumes — high-tech equipment, servers, software, machinery subject to rapid obsolescence. It front-loads the maximum depreciation, which also defers taxable profit to later years when the asset is usually less productive.

4. Units of Production Method

How it works: Depreciation per unit = (Cost − Salvage) ÷ Total Estimated Units. Each year's charge = units produced × depreciation per unit.

Why use it: This is the fairest method for assets that wear out through use, not time — mining equipment, delivery vehicles, printing presses, manufacturing machines. The expense lands in the same year the output is generated, which is an excellent matching of cost with revenue.

5. Sum of the Years' Digits (SYD)

How it works: Digits are summed (5-year life → 5+4+3+2+1 = 15). Year 1 writes off 5/15 of the depreciable base, Year 2 writes off 4/15, and so on. Salvage value is preserved.

Why use it: SYD is a middle path between SLM and WDV. It gives a strong, front-loaded charge but still ends exactly at the salvage value over the asset's life — ideal for vehicles, heavy equipment and any asset whose early years are far more productive than its later ones, when a simple declining percentage feels too aggressive.

Depreciation FAQ

What is salvage value?▶
Salvage (residual) value is the amount an asset can still be sold for after its useful life. Total depreciation is the cost minus salvage value — you only write off the value actually consumed.
Is depreciation a real cash expense?▶
No. Depreciation is a non-cash accounting expense that spreads an asset's cost over its life. It reduces reported profit and taxable income, but no cash leaves the business when you book it.
Why do tax and accounting depreciation differ?▶
Tax laws usually prescribe fixed rates and methods (often WDV) to simplify collections, while accounting standards allow whichever method best reflects an asset's actual usage. The two schedules therefore often differ — a common cause of deferred tax.
What if I use the asset beyond its useful life?▶
Once fully depreciated, no more depreciation is booked. The asset stays on the books at its salvage value (or at zero if salvage was zero) until it is sold or scrapped.