Straight-line, declining balance, sum-of-the-years' digits and units of production, with a yearly schedule.
Depreciation spreads the cost of an asset, less its salvage value, over its useful life, and this page does it with five textbook methods. Straight-line charges (cost − salvage) ÷ life every year: an asset that cost 10,000, with a salvage value of 1,000 and a life of 5 years, loses 9,000 ÷ 5 = 1,800 a year. Double-declining balance charges the opening book value times 2 ÷ life, which is 40% here: 4,000, then 2,400, then 1,440, then 864. The 150% method uses 1.5 ÷ life, so 30% a year and a first charge of 3,000. Sum-of-the-years' digits multiplies the 9,000 by a falling fraction, 5/15, 4/15, 3/15, 2/15 and 1/15, which gives 3,000, 2,400, 1,800, 1,200 and 600. Units of production divides 9,000 by the total units the asset will give, 40,000 in the example, which is 0.225 a unit, then multiplies by the units used each year.
No method on this page writes an asset below its salvage value. Declining balance never reaches the salvage value on its own, because each year takes a percentage of what is left. In the 10,000 example the 200% method leaves a book value of 1,296 after four years, so the fifth year is capped at 296 to land on 1,000. Many textbooks and tax systems switch to straight-line in the year it gives a larger charge, and the switch is on by default. The 150% method shows why: in year 4 the book value is 3,430, declining balance would charge 1,029, and straight-line over the 2 years left charges 1,215, so the switch uses 1,215 in years 4 and 5. Turn the switch off and the schedule stops at the end of the life above the salvage value, and the page says so.
If the asset was bought part way through the year, enter the months in service in year 1. Six months is the half-year convention. With straight-line the first year gets 6 ÷ 12 of a full charge, the middle years get a full charge and the last fiscal year gets the other half, so a 5-year life runs over 6 fiscal years: 900, 1,800, 1,800, 1,800, 1,800 and 900. For sum-of-the-years' digits each year of life is split across two fiscal years, which gives 1,500, 2,700, 2,100, 1,500, 900 and 300. Declining balance takes the fraction of the first year only, and the rest follows from the new book value. Units of production does not use months, because the charge follows use.
This is a textbook accounting calculator. It does not use tax tables such as MACRS, bonus depreciation, Section 179, capital allowance pools or any country's tax limits, and it does not decide which method your accountant or tax authority requires. It treats the useful life as a whole number of years from 1 to 50 and takes amounts of up to 1,000,000,000,000. Units of production accepts up to 60 years of usage figures. Amounts have no currency symbol and are formatted by your browser's language setting. Nothing you type is stored or sent. The result is an estimate, not financial advice.
Subtract the salvage value from the cost and divide by the useful life in years. For a 10,000 asset with a 1,000 salvage value and a 5-year life, that is (10,000 − 1,000) ÷ 5 = 1,800 a year. The book value falls by 1,800 each year until it reaches 1,000.
Each year's charge is the opening book value times 2 ÷ life. For a 5-year life the rate is 40%, so a 10,000 asset is charged 4,000 in year 1 and 2,400 in year 2. The charge is capped so the book value never falls below the salvage value.
A percentage of a shrinking balance never reaches the salvage value, so the final year is capped. With 10,000, salvage 1,000 and 5 years at 200%, year 5 would be 518.40 but only 296 remains to depreciate, so 296 is charged. With the switch on, the page also moves to straight-line when that charge is larger.
It counts only 6 months of depreciation in the first year and the other 6 in the year after the life ends. A 5-year straight-line asset of 10,000 with 1,000 salvage gets 900 in year 1, 1,800 in years 2 to 5 and 900 in year 6. Enter 6 in Months in service in year 1 to use it.
It charges by use instead of time. Divide cost minus salvage by the total units, for example 9,000 ÷ 40,000 = 0.225 a unit, then multiply by the units used in each year. Using 12,000 units in year 1 gives a charge of 2,700.
No. The text is processed in your browser and not uploaded, and this page does not save your numbers, so a refresh brings back the example.