Depreciation Calculator: Book Value & Rate

How to use this depreciation calculator

Enter the asset cost, the salvage value and the useful life in years.
Enter how many years have elapsed and pick the method: straight line or declining balance.
Read the large figure: the book value after the elapsed years, with the depreciation amounts and rate alongside.

What a depreciation calculator is

A depreciation calculator allocates the cost of an asset, minus its expected salvage value, over its useful life. Two common methods are offered: straight line, which charges the same amount each year, and declining balance, which charges a constant percentage of the remaining book value and reaches the salvage value exactly at the end of the life.

In the default case an asset costing $30,000 with a $5,000 salvage value and a 5-year life produces $5,000.00 of straight-line depreciation each year. After one year the book value is $25,000.00; after five years it equals the $5,000 salvage value. Under declining balance the rate is 30.12% and the first-year depreciation is $9,035.19, leaving a book value of $20,964.81. Total depreciation over the full life is $25,000 under both methods.

Reading the chart

The chart under the result draws the book value across the asset's whole life under both methods. The blue line is the method you have selected and the orange line is the other method, so the faster early drop of declining balance shows against the even steps of straight line. Both curves end at the salvage value, which the dashed line marks. Move your mouse over the chart, or touch it, to read both book values at any year.

The formulas

Straight-line depreciation

Annual depreciation = (cost − salvage) ÷ life

Cost is the asset's original cost, salvage its expected value at the end of its life, and life the useful life in years. The same dollar amount comes off every year: for the default case, ($30,000 − $5,000) ÷ 5 = $5,000.00 per year.

Declining-balance rate

Annual rate = 1 − (salvage ÷ cost)^{1 ÷ life}

This rate is applied to the remaining book value each year and lands exactly on the salvage value at the end of the life. In the default case the rate is 30.12%, so the first-year depreciation is $9,035.19.

Book value

Straight line: cost − annual depreciation × y; declining: cost × (salvage ÷ cost)^{y ÷ life}

Here y is the number of years elapsed. After one year the default asset is worth $25,000.00 under straight line and $20,964.81 under declining balance; after five years both reach the $5,000 salvage value.

Examples

Example	Cost	Salvage value	Life	Straight line per year	Declining rate
Default	$30,000	$5,000	5 years	$5,000.00	30.12%
Car	$25,000	$3,000	6 years	$3,666.67	29.77%
Machine	$80,000	$10,000	10 years	$7,000.00	18.77%

For the car, the book value after 3 years is $14,000.00 under straight line against $8,660.25 under declining balance.

Three mistakes people make with depreciation

Applying the declining-balance rate to the original cost every year

The rate is applied to the remaining book value, not to the original cost. Using the original cost each year overstates depreciation and drives the book value below salvage too soon.

Forgetting that both methods reach the same total depreciation

Straight line and declining balance differ in timing but, when the declining-balance rate is set as shown, both allocate the identical total amount — cost minus salvage, $25,000 in the default case — over the full life.

Entering years elapsed greater than the useful life

Once the useful life is reached the book value equals the salvage value under both methods. This calculator holds it there: further years do not reduce it below salvage.

Frequently asked questions

What is the difference between straight line and declining balance?

Straight line takes the same amount off every year. Declining balance applies a fixed rate to the remaining book value, so the early years are larger. In the default case, the first year is $5,000.00 under straight line and $9,035.19 under declining balance.

Why is total depreciation the same under both methods?

Both end at the salvage value. In the default case, the total over the life is $25,000 either way.

How does the declining-balance rate reach the salvage value?

The rate comes from 1 − (salvage ÷ cost)^(1 ÷ life), which lands the book value exactly on the salvage value at the end of the life. For the default case, it is 30.12% per year.

How do the methods compare in Example 2?

For the car, the book value after 3 years is $14,000.00 straight line against $8,660.25 declining balance. The declining rate is 29.77%.

What is salvage value?

It is the value you expect the asset to have at the end of its useful life. Both methods depreciate the asset down to it.

Does this replace tax or accounting rules?

No. Rules for tax or reporting may differ from these formulas. The page runs in your browser and is a calculation aid, not financial advice.

Privacy and important information

This calculator runs entirely in your browser: your numbers are never sent to a server, stored, or shared. It calculates book value and depreciation, not tax deductions — tax rules can differ from the method you select here.

Part of RahaKit's free finance calculators.

Depreciation Calculator