Calculate a depreciation schedule by straight-line, declining balance, double declining, sum-of-years' digits or units of production, with book value.
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Straight-line writes off $9,000.00 in the first year and $45,000.00 over 5 years, leaving a book value of $5,000.00.
| Year | Depreciation | Accumulated | Book value |
|---|---|---|---|
| 1 | $9,000.00 | $9,000.00 | $41,000.00 |
| 2 | $9,000.00 | $18,000.00 | $32,000.00 |
| 3 | $9,000.00 | $27,000.00 | $23,000.00 |
| 4 | $9,000.00 | $36,000.00 | $14,000.00 |
| 5 | $9,000.00 | $45,000.00 | $5,000.00 |
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.
Straight-line depreciation is (cost − salvage value) ÷ useful life a year: a 50,000 asset with 5,000 salvage over 5 years depreciates 9,000 a year. Double declining balance front-loads the same 45,000, charging 20,000 in year one. Both are book-accounting methods, not US tax depreciation.
Book value falls by the same 9,000 every year: 41,000, 32,000, 23,000, 14,000 and finally 5,000, the salvage value. That is 20% of the depreciable amount a year. Excel's SLN function uses the same formula: SLN(30000, 7500, 10) = 2,250.
Add the year numbers: for 5 years, 1 + 2 + 3 + 4 + 5 = 15, which is n(n + 1) ÷ 2. Year t takes (n − t + 1) ÷ 15 of the depreciable amount, so year one takes 5/15 and year two 4/15.
On 45,000 that gives 15,000, 12,000, 9,000, 6,000 and 3,000, falling by the same 3,000 each year.
Multiply the opening book value by 2 ÷ life, which is 40% for 5 years, and never go below salvage:
| Year | Depreciation | Ending book value |
|---|---|---|
| 1 | 20000.00 | 30000.00 |
| 2 | 12000.00 | 18000.00 |
| 3 | 7200.00 | 10800.00 |
| 4 | 4320.00 | 6480.00 |
| 5 | 1480.00 | 5000.00 |
In year 5, 40% of 6,480 would be 2,592, which would take the book value below 5,000, so the charge stops at 1,480. Microsoft's DDB documentation applies the same salvage floor.
150% declining balance uses 1.5 ÷ life, 30% here: 15,000, 10,500, 7,350, 5,145 and 3,601.50. That leaves a book value of 8,403.50, still 3,403.50 above salvage.
Switching to straight-line once it gives the larger charge fixes this. From year 4, spreading the remaining 12,150 over the last two years gives 6,075 a year and lands exactly on 5,000.
With zero salvage, declining balance never reaches zero on its own: 10,000 at 40% over 5 years leaves 777.60. With the switch, years 4 and 5 charge 1,080 each and the book value ends at 0.
Spreadsheet DB picks the rate that reaches salvage instead: 1 − (salvage ÷ cost)^(1 ÷ life), rounded to three decimals. For a 1,000,000 asset with 100,000 salvage over 6 years, the rate is 0.319 and year one is 319,000.
Charge a fixed amount per unit made: (cost − salvage) ÷ lifetime units = 45,000 ÷ 50,000 = 0.90 per unit. Producing 12,000, 15,000, 10,000, 8,000 and 5,000 units gives 10,800, 13,500, 9,000, 7,200 and 4,500, which totals the full 45,000.
If production falls short of the expected total, the asset is still above salvage at the end of the list. If production runs over, the charges stop at salvage.
Pick the method that matches how the asset is used up, which is what IAS 16 asks for. Straight-line suits even use over time, declining balance an asset that gives more service early, and units of production one whose wear follows output.
IAS 16 names straight-line, diminishing balance and units of production. It does not list sum-of-years' digits, and paragraph 62A prohibits methods based on the revenue an asset generates.
For US taxes, IRS Publication 946 sets the rules: MACRS property classes and recovery periods, with a method for each class of 200% declining balance, 150% declining balance or straight-line.
First-year conventions such as half-year, mid-quarter or mid-month apply too, and Section 179 expensing and bonus depreciation can change the deduction.
The schedules here are full-year book schedules and apply none of those rules.
Yearly depreciation often sits in the fixed costs of a break-even calculation. To value the cash a business produces, use the DCF valuation calculator.
A car lease payment covers the car's depreciation down to its residual value plus a finance charge, and the lease calculator splits the two.
Checked against: Microsoft SLN documentation example: SLN(30000, 7500, 10) = 2,250
Checked against: Microsoft SYD documentation example: year 1 = 4,090.91, year 10 = 409.09
Checked against: Microsoft DDB documentation example: first year 480.00, tenth year 22.12
Checked against: 4000, 2400, 1440, then SL 2160/2 = 1080 beats DDB 864 in years 4–5
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.
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.
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.
US tax depreciation depends on the property class, depreciation system and applicable convention in IRS Publication 946. Different classes use 200% declining balance, 150% declining balance or straight-line methods; personal property is not uniformly depreciated at 200%. Placement-in-service dates and eligibility choices also matter. This calculator builds full-year book schedules rather than calculating MACRS tables, Section 179 or bonus depreciation deductions. Check the rules for the actual asset and tax year separately.
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.
For planning only. Lenders, tax authorities and markets apply their own rounding, fees and rules; confirm figures with them before you commit.
This calculator includes 9 worked examples with independently sourced answers. They run in the test suite, and you can run them here too.