About this Depreciation
All physical assets—computers, vehicles, machinery—lose value over time. In accounting, this is called depreciation. This calculator uses the Straight-Line Method, which spreads the cost of the asset evenly over its useful life. It is the simplest and most common method used for financial reporting.
Who this calculator is for
- Bookkeepers and operators tracking the annual expense of long-lived assets.
- Business owners comparing equipment purchases and expected residual values.
- Students or analysts learning the straight-line depreciation method.
When to use it
- Estimate the annual accounting expense for a fixed asset.
- Check how salvage value or useful life changes the yearly depreciation charge.
- Prepare rough planning numbers before moving into a full accounting or tax workflow.
How to use this calculator
- Enter the Asset Cost (purchase price).
- Enter the estimated Salvage Value (what you can sell it for at the end).
- Enter the Useful Life in years.
- The result shows the annual deduction amount.
Key assumptions
- This calculator uses straight-line depreciation only, which spreads the depreciable base evenly across the asset life.
- Asset cost, salvage value, and useful life are assumed to be known estimates at the start of the schedule.
- Useful life must be positive, and salvage value should not exceed the original cost in this simple model.
Accuracy and testing
Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.
How this calculator works
Inputs explained
Asset Cost
The total amount paid to acquire the asset, including shipping, installation, and taxes.
Salvage Value
The estimated residual value of the asset at the end of its useful life. Sometimes called 'Scrap Value'.
Useful Life
The period of time (in years) the asset is expected to be productive for the business.
Understanding your results
Example scenarios
Office Laptop
Cost $2,000. Salvage $0. Life 4 years. Depreciation = $500/year.
Delivery Truck
Cost $50,000. Salvage $5,000. Life 9 years. Depreciable Base $45,000. Annual Expense $5,000.
Key Features
- Straight-Line Logic
- Rate Percentage
- Salvage Value Support
Things to Keep in Mind
This tool calculates Straight-Line depreciation only. It does not support accelerated methods like Double Declining Balance or Sum-of-Years-Digits.
Tips & Best Practices
- Straight-line is best for assets that wear out evenly over time (like furniture).
- Check IRS Guidelines (e.g., MACRS) if you are calculating depreciation strictly for tax purposes, as rules vary by asset class.
- A salvage value of $0 is common for tech equipment that becomes obsolete.
Glossary of Terms
- Book Value
- The value of the asset currently on the balance sheet (Cost - Accumulated Depreciation).
- Accumulated Depreciation
- The total amount of depreciation expense that has been recorded for an asset since it was acquired.
- Useful Life
- An estimate of the number of years an asset is likely to remain in service.