Calculate asset depreciation using Straight-Line, Declining Balance, or Sum-of-Years-Digits methods. Get the annual depreciation, a full year-by-year schedule, and book value over time.
Straight-Line • Declining Balance • SYD
| Year | Depreciation | Accumulated | Book Value |
|---|
Depreciation spreads the cost of a long-lived asset over its useful life rather than expensing it all at once. The depreciable base is the asset cost minus its salvage value (what it's worth at end of life). Three common methods divide that base differently: Straight-Line expenses an equal amount each year; Declining Balance (double-declining, 200%) front-loads depreciation by applying a fixed rate to the shrinking book value; and Sum-of-Years-Digits is another accelerated method that weights early years more heavily.
For a $50,000 asset with a $5,000 salvage value over 5 years, straight-line depreciation is ($50,000 − $5,000) ÷ 5 = $9,000 per year. Accelerated methods like DDB write off more in the early years and less later, which can be advantageous for taxes. Book value — the asset's remaining value on the books — never drops below the salvage value under any method.
(Cost − Salvage) ÷ Life. The same amount every year. Simplest and most common for financial reporting.
Rate = 2 ÷ Life applied to book value each year. Front-loads depreciation; book value never falls below salvage.
Weights early years using the fraction (remaining life ÷ sum of years). Another accelerated approach.
Cost minus accumulated depreciation. It declines over the asset's life and stops at the salvage value.
Depreciation spreads the cost of an asset across the years it is used, matching expense to the revenue it helps produce. Straight-line is the simplest and most common for financial reporting: equal charges every year. Declining balance front-loads the expense, which better reflects how most equipment actually loses value and defers tax into later years. US tax depreciation follows MACRS, a prescribed system with fixed recovery periods — 27.5 years for residential rental property, 39 for commercial, 5 for vehicles and computers — and it deliberately ignores salvage value, unlike book depreciation.
Straight-line = (Cost − Salvage) ÷ Useful lifeDouble declining balance = Book value at start of year × (2 ÷ Useful life)MACRS residential = Building basis ÷ 27.5 (land is never depreciated)where:
Assumptions: Book and tax depreciation routinely differ and both are legitimate. Depreciation claimed on rental property is recaptured on sale at up to 25%, whether or not it was actually claimed — which is why not claiming it is never an advantage.
Compare straight-line with double declining balance over an eight-year life.
ResultStraight-line $5,000/yr — DDB $11,250 in year one
Both methods eventually deduct the same total; only the timing differs. Front-loading is worth real money because a deduction today is worth more than the same deduction in year eight. For a $275,000 rental building, MACRS gives $275,000 ÷ 27.5 = $10,000 a year for 27.5 years.