This calculator illustrates how an asset’s cost can be allocated over a useful life using straight-line, a simple declining-balance method or sum-of-years’ digits. It reports the expense for the selected elapsed period and the resulting book value.
This is a planning illustration rather than a tax-return calculator. Tax depreciation can require prescribed recovery periods, conventions, eligibility rules and methods that this form does not model.
Salvage must be between zero and cost, lifetime must be at least one, and elapsed periods cannot exceed lifetime. The selected currency is a label for interpretation and is not appended to the numeric response.
Straight line: expense=(cost−salvage)/life; book value after t periods=cost−t×expense.
Declining balance on this page: rate=1/life; each period’s expense=opening book value×rate, limited so book value does not fall below salvage.
Sum-of-years’ digits: denominator=life(life+1)/2; expense in period i=(life−i+1)/denominator×(cost−salvage).
The reported expense is the expense in the final period included by the elapsed-period input, not cumulative depreciation. Book value is cost less accumulated calculated depreciation.
| Value | Meaning | Constraint |
|---|---|---|
| Cost C | Original amount allocated to the asset | Nonnegative |
| Salvage S | Estimated residual value at the end | Between 0 and C |
| Life n | Number of depreciation periods | Integer of at least 1 |
| Elapsed t | Completed periods included in book value | Integer from 0 through n |
| Expense | Depreciation in the final included period | Currency amount |
| Book value | Cost less calculated accumulated depreciation | Not below salvage |
Use cost 10,000, salvage 1,000, life 3 years and elapsed time 2 years. Straight-line depreciable amount is 9,000, so annual expense is 9,000/3=3,000. After two years, book value is 10,000−2×3,000=4,000.
Under this page’s declining method, the rate is 1/3=33.33%. Year one expense is 3,333.33 and book value is 6,666.67. Year two expense is 2,222.22 and book value is 4,444.44.
For sum-of-years’ digits, denominator is 6. Year one expense is 3/6×9,000=4,500; year two is 2/6×9,000=3,000; book value after year two is 2,500.
Expense is an allocation for the last calculated period. Book value is an accounting amount under the chosen assumptions; it is not necessarily resale value, replacement cost or market value.
Accelerated methods place more expense in early periods. This can change reported profit timing without changing the asset’s purchase cash flow. Compare methods only with the same cost, salvage, life and elapsed period.
For tax or statutory reporting, use the rules that govern the asset and jurisdiction. The IRS MACRS system, for example, applies recovery classes and conventions beyond these simple equations. Keep a detailed asset schedule and obtain accounting advice when the result affects a filing or financial statement.
If elapsed time is zero, book value remains at original cost because no period has been completed. For accelerated methods, the displayed expense can be zero at that point. Use elapsed 1 to see the first period’s charge. This convention matters when comparing the output with a schedule dated at the beginning or end of a period.
Changing useful life or salvage after depreciation has begun can require a prospective accounting treatment rather than simply recalculating all prior years. This page does not preserve an existing schedule or amendments; it recomputes from the inputs supplied.
No. It allocates an asset’s recorded cost across periods. The original purchase and later cash flows are separate transactions.
Their weights are larger in early periods. Declining balance applies a fixed rate to a larger opening book value, while sum-of-years’ digits assigns a larger fraction first.
No. Book value follows accounting assumptions. Market value depends on condition, demand and other economic factors.
No. Lifetime and elapsed period must use the same selected unit. Convert both to one whole-period basis before calculating.
Use it only as an illustration. Tax rules may prescribe a different basis, recovery period, convention, method or eligibility treatment.
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