Depreciation Calculator

Straight-line depreciation is the simplest and most widely used method for allocating the cost of a tangible asset across its useful life. Rather than front-loading or accelerating the expense, it spreads the depreciable amount evenly over each accounting period. This calculator automates that process: you enter the asset's original cost, its expected salvage value at the end of its useful life, and the number of years you plan to use it — and the tool instantly returns both annual and monthly depreciation figures, saving you manual calculation time and reducing arithmetic errors.

The core concept rests on the difference between what you paid for an asset and what it will be worth when you're done with it. That difference — called the depreciable base — is the total amount that must be expensed over the asset's useful life. Salvage value is not depreciated because it represents the residual economic worth you expect to recover, whether through sale, trade-in, or scrap. Getting the salvage value estimate right matters: overestimating it shrinks your annual deduction and understates expense on your income statement, while underestimating it does the opposite.

Useful life is arguably the most judgment-intensive input. The IRS publishes asset class guidelines (Publication 946) that specify recovery periods for common property — for example, 5 years for computers and vehicles, 7 years for office furniture — but businesses can use their own engineering or historical estimates for book (financial reporting) purposes. This distinction is important: tax depreciation (often MACRS in the US) and book depreciation can differ significantly, and this calculator focuses on straight-line book depreciation, which is what GAAP-compliant financial statements typically require for assets held for internal use.

A common mistake is confusing depreciation methods when switching between tax filings and financial statements. Straight-line produces the lowest depreciation expense in the early years compared to accelerating methods like double-declining balance, which means it reports higher early profits — a point auditors and lenders notice. Another frequent error is failing to update the depreciation schedule when an asset is upgraded or impaired mid-life; in those cases, the remaining book value and revised useful life should be recalculated going forward rather than retroactively restating prior periods. This calculator helps you quickly re-run estimates whenever asset assumptions change.