Accumulated Depreciation
Calculate accumulated depreciation using straight-line, declining balance, sum of years digits, and units of production methods with our free calculator.
What Is Accumulated Depreciation?
Accumulated depreciation is the total amount of depreciation expense that has been recorded against a fixed asset since it was placed into service. It represents the wear and tear, deterioration, or obsolescence of long-term assets like machinery, vehicles, equipment, and buildings. Accumulated depreciation is a contra-asset account that reduces the original cost of the asset to its current book value on the balance sheet.
Our accumulated depreciation calculator supports four depreciation methods: straight-line, declining balance, sum of years digits, and units of production. Simply enter your asset's cost, salvage value, useful life, and desired time period, and the calculator instantly computes the accumulated depreciation.
Depreciation Methods Explained
Each method distributes the cost of an asset over its useful life differently. The straight-line method spreads the cost evenly. The declining balance method accelerates depreciation in early years. The sum of years digits method provides a middle ground, and the units of production method ties depreciation to actual usage.
Frequently Asked Questions
What is the difference between depreciation expense and accumulated depreciation?
Depreciation expense is the amount of depreciation recorded in a single accounting period. Accumulated depreciation is the sum of all depreciation expense recorded since the asset was acquired. Depreciation expense flows to the income statement each period, while accumulated depreciation appears on the balance sheet as a contra-asset.
Can accumulated depreciation exceed the cost of an asset?
No. Accumulated depreciation cannot exceed the depreciable cost of an asset, which is the original cost minus salvage value. Once the asset is fully depreciated, no further depreciation is recorded, even if the asset remains in use.
What assets are subject to accumulated depreciation?
Tangible fixed assets with useful lives exceeding one year are subject to depreciation, including vehicles, machinery, equipment, furniture, and buildings. Land is not depreciated because it does not wear out or become obsolete.
How do I choose the right depreciation method?
The straight-line method is simplest and most common for assets that provide consistent benefits over time. Declining balance matches higher depreciation with higher early productivity. Units of production works best for assets whose wear depends on usage, like manufacturing equipment.
What is book value and how does accumulated depreciation affect it?
Book value is the original cost of an asset minus its accumulated depreciation. As accumulated depreciation increases over time, the book value decreases until it reaches the salvage value at the end of the asset's useful life.
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