Depreciation Calculator

What is Asset Depreciation?

Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. It represents how much of an asset's value has been used up. Depreciation helps companies match the expense of an asset with the revenue it generates, in accordance with the matching principle of accrual accounting.

To calculate depreciation, you need to know three main variables: the **Asset Cost** (purchase price), the **Salvage Value** (estimated value at the end of its useful life), and the **Useful Life** (number of years the asset is expected to remain in service).

Depreciation Methods Supported

This calculator supports the three most common depreciation methods:

• Straight-Line Depreciation: The simplest and most widely used method. It distributes the depreciation expense evenly over each year of the asset's useful life. $$\text{Annual Depreciation} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}}$$
• Declining Balance: An accelerated depreciation method where the depreciation rate is a multiple of the straight-line rate (e.g., 200% or double declining balance). It results in larger depreciation expenses in the early years and smaller expenses in the later years. $$\text{Depreciation} = \text{Book Value} \times \text{Depreciation Rate}$$
• Sum of the Years' Digits (SYD): Another accelerated method that sums the digits of the years of useful life to create a fraction applied to the depreciable base. $$\text{Fraction} = \frac{\text{Remaining Useful Life}}{\text{Sum of the Years' Digits}}$$

Partial-Year Conventions

When an asset is bought in the middle of a fiscal year, depreciation is calculated for only the portion of the year it was in service. This calculator supports several standard conventions to handle the first and last years of depreciation, including the Half-Year convention, Full-Month, Half-Month (15th of the month cutoff), and day-count accuracy.