Depreciation Calculator
Depreciation spreads the cost of a long-lived asset — machinery, vehicles, equipment — across the years it is actually used, rather than expensing it all at once. This calculator uses the straight-line method, the simplest and most common approach, to give you the yearly depreciation expense from an asset’s cost, salvage value, and useful life. The math is identical in any currency.
- Depreciable base
- Salvage value
- Depreciable base
- $45,000.00
- Annual depreciation
- $4,500.00
- Useful life
- 10
- Salvage value
- $5,000.00
Under straight-line, you write off 4500.00 every year for 10 years until the asset reaches its 5000 salvage value. A declining-balance method would front-load this, giving larger write-offs in the early years and smaller ones later.
How it works
A capital asset earns its keep over many years, so accounting matches its cost to those years instead of recording one giant expense up front. The portion you cannot recover — the asset’s cost minus what you expect to sell it for at the end (its salvage or residual value) — is the depreciable base. Straight-line depreciation simply divides that base evenly across the asset’s useful life, producing the same expense every year.
That steady annual figure reduces reported profit and, in most tax systems, lowers taxable income, while the asset’s book value on the balance sheet steps down year by year until it reaches the salvage value. Because the expense is constant, straight-line is easy to forecast and audit, which is why it dominates financial reporting.
Three inputs drive the result. A higher purchase cost or a longer life changes the annual figure in opposite directions, and a higher salvage value shrinks the depreciable base — so an asset you expect to resell well depreciates less each year than one headed for scrap.
Annual depreciation = (Asset cost − Salvage value) ÷ Useful life in years. The numerator is the depreciable base — the total amount written off over the asset’s life.
Worked example
Buy a machine for 50,000 that you expect to sell for 5,000 after 10 years of use. The depreciable base is 50,000 − 5,000 = 45,000. Spread evenly over 10 years, that is 45,000 ÷ 10 = 4,500 of depreciation expense each year. After year one the book value is 45,500; after year ten it has stepped all the way down to the 5,000 salvage value.
Things to watch out for
Straight-line assumes the asset loses value evenly, which rarely matches reality — vehicles and electronics lose more in their early years. Declining-balance and double-declining-balance methods front-load depreciation for bigger early write-offs and a better tax-timing benefit, while units-of-production ties depreciation to actual usage. Tax authorities often mandate specific schedules (such as MACRS in the US) that override the simple straight-line figure, so check local rules before relying on this for filings.
Frequently asked questions
What is the depreciable base?+
It is the asset’s purchase cost minus its expected salvage value — the total amount that gets written off over the asset’s useful life. Salvage value is never depreciated because you expect to recover it.
How is straight-line different from declining-balance?+
Straight-line writes off the same amount every year. Declining-balance applies a fixed rate to the shrinking book value, producing larger deductions early on and smaller ones later — useful when an asset loses value fastest at the start.
What if I do not expect any salvage value?+
Set salvage value to zero. The full asset cost then becomes the depreciable base and is spread evenly across the useful life.
Does this match my tax depreciation?+
Not necessarily. Many tax systems require prescribed schedules or accelerated methods that differ from book straight-line. Use this for planning and financial reporting, and confirm the figure against local tax rules.
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Disclaimer: This calculator is for educational and informational purposes only and provides estimates, not financial advice. Interest rates, taxes, fees, and local rules vary and change over time. Confirm figures with a qualified professional before making any financial decision.
Last reviewed: 2026-06-22