# Depreciation calculator

> Calculate a depreciation schedule by straight-line, declining balance, double declining, sum-of-years' digits or units of production, with book value.

Interactive version: https://www.calcopenly.com/finance/depreciation-calculator
Subject: Finance calculators

Depreciation spreads an asset's cost, less its expected salvage value, over its useful life. Straight-line charges the same amount every year, (cost − salvage) ÷ life. Declining balance applies a fixed rate to the book value left, so charges fall year by year; double declining uses 2 ÷ life. Sum-of-years' digits weights year t by (n − t + 1) ÷ (n(n + 1)/2), and units of production charges a fixed amount per unit made.

With the defaults, an asset costing 50,000 with a salvage value of 5,000 and a 5-year life, straight-line depreciation is 9,000 a year, 20% of the depreciable amount. Double declining balance would charge 20,000 in the first year and sum-of-years' digits 15,000; every method writes off the same 45,000 in total.

These are book-accounting methods. US tax depreciation follows MACRS recovery periods and conventions in IRS Publication 946, which this schedule does not apply.

## Inputs

- **Method** (options: Straight-line, Declining balance, Sum-of-years' digits, Units of production)
- **Asset cost**
- **Salvage value**: Expected value at the end of its useful life
- **Useful life**
- **Declining rate** (options: Double declining (200% ÷ life), 150% declining (150% ÷ life), Rate that reaches salvage (spreadsheet DB), Custom rate)
- **Rate per year**
- **Switch to straight-line when it gives more**: Each year, spread the remaining amount above salvage evenly over the remaining years if that is larger
- **Units produced each year**
- **Total units over the asset's life**

## Results

- First-year depreciation — main result
- Final-year depreciation
- Total depreciation
- Book value at the end
- Depreciation rate
- Depreciation per unit
- Years in schedule

## Formula

$$
\text{SL} = \frac{C - S}{n}\quad \text{DB}_t = B_{t-1}\,d\quad \text{SYD}_t = (C - S)\frac{n - t + 1}{n(n+1)/2}\quad \text{UOP}_t = u_t\frac{C - S}{U}
$$

## Worked examples

### Straight-line 30,000 cost, 7,500 salvage, 10 years

- Method: Straight-line
- Asset cost: 30,000
- Salvage value: 7500
- Useful life: 10 years
- **First-year depreciation: 2,250.00**
- **Book value at the end: 7,500.00**
- **Depreciation rate: 10%**
- Checked against: Microsoft SLN documentation example: SLN(30000, 7500, 10) = 2,250

### Sum-of-years' digits 30,000 / 7,500 / 10 years

- Method: Sum-of-years' digits
- Asset cost: 30,000
- Salvage value: 7500
- Useful life: 10 years
- **First-year depreciation: 4,090.91**
- **Final-year depreciation: 409.09**
- **Total depreciation: 22,500.00**
- Checked against: Microsoft SYD documentation example: year 1 = 4,090.91, year 10 = 409.09

### Double declining 2,400 / 300 / 10 years

- Method: Declining balance
- Asset cost: 2400
- Salvage value: 300
- Useful life: 10 years
- Declining rate: Double declining (200% ÷ life)
- Switch to straight-line when it gives more: no
- **First-year depreciation: 480.00**
- **Final-year depreciation: 22.12**
- **Book value at the end: 300.00**
- Checked against: Microsoft DDB documentation example: first year 480.00, tenth year 22.12

### Double declining with switch to straight-line, zero salvage

- Method: Declining balance
- Asset cost: 10,000
- Salvage value: 0
- Useful life: 5 years
- Declining rate: Double declining (200% ÷ life)
- Switch to straight-line when it gives more: yes
- **First-year depreciation: 4,000.00**
- **Final-year depreciation: 1,080.00**
- **Book value at the end: 0.00**
- Checked against: Python decimal: 4000, 2400, 1440, then SL 2160/2 = 1080 beats DDB 864 in years 4–5

### Double declining without switch stops short of zero salvage

- Method: Declining balance
- Asset cost: 10,000
- Salvage value: 0
- Useful life: 5 years
- Declining rate: Double declining (200% ÷ life)
- Switch to straight-line when it gives more: no
- **Final-year depreciation: 518.40**
- **Book value at the end: 777.60**
- Checked against: Python decimal: 10000 × 0.6⁵ = 777.60 left after five years

### Spreadsheet DB rate 1,000,000 / 100,000 / 6 years

- Method: Declining balance
- Asset cost: 1,000,000
- Salvage value: 100,000
- Useful life: 6 years
- Declining rate: Rate that reaches salvage (spreadsheet DB)
- Switch to straight-line when it gives more: no
- **Depreciation rate: 31.9%**
- **First-year depreciation: 319,000.00**
- **Final-year depreciation: 46,465.57**
- Checked against: Microsoft DB documentation: rate = 1 − (100000/1000000)^(1/6) rounded to 0.319; Python decimal full-year schedule, year 6 capped at salvage

## Questions

### How do you calculate straight-line depreciation?

Subtract the salvage value from the cost and divide by the useful life in years. An asset costing 50,000 with a 5,000 salvage value and a 5-year life depreciates by (50,000 − 5,000) ÷ 5 = 9,000 a year, leaving a book value of 5,000. Excel's SLN function does the same: SLN(30000, 7500, 10) = 2,250.

### How does double declining balance depreciation work?

Multiply the start-of-year book value by 2 ÷ life, and stop when the book value reaches salvage. For 50,000 over 5 years the rate is 40%: 20,000 in year 1, then 12,000, 7,200 and 4,320, and 1,480 in year 5 to land on the 5,000 salvage. With zero salvage the rate never reaches zero, so companies switch to straight-line when it gives a larger charge.

### Which depreciation methods does IFRS allow?

IAS 16 names straight-line, diminishing balance and units of production, and asks for the method that reflects how the asset's benefits are used up. It does not list sum-of-years' digits, and paragraph 62A prohibits methods based on the revenue an asset generates.

### How does depreciation work for US taxes?

Most business property uses MACRS (IRS Publication 946): cars are 5-year property, office furniture 7-year, residential rental buildings 27.5 years and nonresidential real property 39 years. Personal property is depreciated at 200% declining balance switching to straight-line, with a half-year convention unless more than 40% is placed in service in the last quarter (mid-quarter), and real property uses mid-month.

### What are the Section 179 and bonus depreciation limits?

For 2025, US businesses can expense up to $2,500,000 of qualifying property under Section 179, reduced once purchases exceed $4,000,000; for 2026 the figures are $2,560,000 and $4,090,000 (IRS Publication 946). Bonus depreciation is 100% for qualifying property acquired and placed in service after January 19, 2025.

### How accurate is the depreciation calculator?

Accuracy depends on your inputs and the method's assumptions. Decimal arithmetic uses 50 significant digits, but estimates, numerical methods and source data can be less precise; the displayed rounding does not remove those limits. It is checked against 9 worked examples whose answers come from independent sources; for example, “Straight-line 30,000 cost, 7,500 salvage, 10 years” is checked against Microsoft SLN documentation example: SLN(30000, 7500, 10) = 2,250.

### Where does the method come from?

Microsoft Support — SLN, DDB, DB and SYD functions; IRS Publication 946 — How to Depreciate Property.

## Sources

- [Microsoft Support — SLN, DDB, DB and SYD functions](https://support.microsoft.com/office/ddb-function-519a7a37-8772-4c96-85c0-ed2c209717a5)
- [IRS Publication 946 — How to Depreciate Property](https://www.irs.gov/publications/p946)

_Note: financial information, not professional advice._