Depreciation Calculator
Calculate annual depreciation for a business asset using the straight-line or double-declining-balance method.
Book value declines by $5,000.00 every year under straight-line depreciation, from $40,000.00 down to its $5,000.00 salvage value.
- Double-Declining Balance (Year 1)$11,428.57
- Book Value After Year 1 (straight-line)$35,000.00
About the Depreciation Calculator
An asset's purchase price isn't what it's worth on the books a year later — depreciation spreads that cost down to a salvage value over its useful life, and which method you use to spread it changes both your annual expense and your taxable income, sometimes substantially. Assuming straight-line depreciation is the only option, when a business asset might be better matched to an accelerated method, is a common way to miss real tax planning value.
This is the calculator for a small business owner or bookkeeper working out annual depreciation on equipment, a vehicle, or other business property — figuring out what to expense this year, what the asset's book value will be afterward, and how straight-line depreciation compares to an accelerated method like double-declining balance.
The asset cost and useful life you enter run entirely in your browser. There's no login required to model depreciation on equipment or property your business hasn't even purchased yet.
How it’s calculated
Straight-line depreciation is the simplest method: subtract the salvage value (what the asset will be worth at the end of its useful life) from its cost, then divide evenly across the useful life in years — the same dollar amount is expensed every year.
Double-declining balance is an accelerated method that applies a fixed rate — double the straight-line rate — to the asset's remaining book value each year, rather than to its original cost. That front-loads more depreciation into the earliest years and less into later years, which some businesses prefer since newer assets often lose value and usefulness faster than older ones.
Frequently asked questions
What's the difference between straight-line and double-declining-balance depreciation?
Straight-line expenses the same fixed dollar amount every year of the asset's useful life. Double-declining balance expenses a much larger amount in the earliest years and progressively less later on, because it applies a fixed rate to the shrinking book value rather than the original cost each year.
How do I choose a salvage value for an asset?
It should reflect a realistic estimate of what the asset could be sold for once its useful life is over — sometimes based on resale data for similar equipment, sometimes set to zero for assets with no meaningful resale value. It's an estimate, not a guarantee, and can be revised if actual conditions change.
Does depreciation actually affect my cash flow?
Not directly — depreciation is a non-cash accounting expense that spreads out a cost you already paid for when you bought the asset. It does affect your taxable income, though, and lower taxable income can mean a real cash tax savings even though depreciation itself isn't a cash outflow.
Why would a business choose an accelerated depreciation method over straight-line?
Mainly to front-load the tax deduction into earlier years, which can be valuable if a business wants to reduce taxable income sooner rather than later, or if the asset genuinely loses most of its value and usefulness early in its life, like certain technology or vehicles.
Is book value the same as market value?
No — book value is simply cost minus accumulated depreciation on the accounting records, while market value is what the asset would actually sell for. The two can diverge significantly, especially for assets that hold value better (or worse) than their depreciation schedule assumes.
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