Depreciation spreads the cost of a tangible asset over its useful life, matching expenses with the revenue it generates. The two most common methods are straight-line (equal depreciation each year) and declining balance (accelerated depreciation, higher in early years). Use this calculator to determine your asset's book value over time.
Annual Depreciation:
Final Book Value:
How to Use This Tool
Enter the original cost of the asset.
Enter the estimated salvage/residual value at the end of its useful life.
Click Calculate to see the annual depreciation and book value schedule.
The Formula
Straight-line: Depreciation = (Cost - Salvage Value) / Useful Life. Declining balance: Depreciation = Book Value x (2 / Useful Life) each year, reducing the book value until it reaches the salvage value.
Why It Matters
Your small business buys $25,000 equipment with a $5,000 salvage value and 7-year useful life. For taxes, you choose between straight-line ($2,857/year) for steady deductions versus declining balance ($7,143 in year 1) for larger front-loaded tax write-offs. Use this to compare the impact on your book values each year.