Depreciation Calculator

The formula

Straight-line depreciation spreads the loss in value evenly over every year the asset is in service:

Depreciable base = Cost − Salvage value
Annual depreciation = Depreciable base ÷ Useful life
Monthly depreciation = Annual depreciation ÷ 12
Annual rate (%) = (Annual depreciation ÷ Cost) × 100

The “depreciable base” is the part of the cost that actually gets written off. Salvage value is never depreciated, because you expect to recover it when you sell or scrap the asset.

Worked example

A company buys a delivery van for $30,000. It expects to use it for 6 years and sell it for $6,000 at the end.

Depreciable base = 30,000 − 6,000 = 24,000
Annual depreciation = 24,000 ÷ 6 = 4,000 per year
Monthly depreciation = 4,000 ÷ 12 ≈ 333.33 per month
Annual rate = (4,000 ÷ 30,000) × 100 ≈ 13.33%

The book value drops by a flat $4,000 every year until it reaches the $6,000 salvage value:

Common pitfalls

• Depreciating the salvage value. You write off cost minus salvage, not the full cost. A $30,000 asset with $6,000 salvage has a $24,000 base, not $30,000.
• Wrong useful life. Tax authorities publish recovery periods (for example, many office assets use 5 or 7 years). Using a life that is too long or too short distorts both the expense and the book value.
• Confusing straight-line with accelerated methods. Declining balance and sum-of-years-digits front-load the expense; straight-line keeps it flat. This tool only models straight-line.
• Ignoring partial first years. If an asset is placed in service mid-year, accountants often prorate the first year (the half-year or mid-month convention). The monthly figure here helps you prorate manually.
• Mixing book and tax depreciation. The schedule you report to investors can differ from the one you file for tax. Keep them separate.