Depreciation accuracy and testing

Formula source

• The formula for Straight-Line Depreciation is: **Annual Depreciation = (Cost - Salvage Value) / Useful Life** For example, a $10,000 machine with a $2,000 salvage value and 4-year life depreciates ($8,000 / 4) = $2,000 per year.

Test cases

Known limitations

• This tool calculates Straight-Line depreciation only. It does not support accelerated methods like Double Declining Balance or Sum-of-Years-Digits.

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.

Unit handling

• Asset Cost accepts values in $.
• Salvage Value accepts values in $.
• Useful Life accepts values in Years.
• Annual Depreciation is displayed as currency.
• Depreciation Rate is displayed as a percentage.

Rounding rules

• Number displays use up to 2 decimal places in the calculator UI.
• Currency outputs are displayed with standard US dollar formatting.
• Percent outputs are displayed with two decimal places.

Version history

Change log