For informational purposes only. Not financial, investment, or tax advice. Results are estimates based on the inputs provided. Consult a qualified financial professional before making financial decisions.
Calculator tool
How this calculator works
Use the explanation to understand the formula, assumptions, and practical limits behind the calculator result.
What This Calculator Covers
This calculator supports two depreciation methods:
- Straight-line depreciation — the same expense each year
- 200% declining balance — a faster early-year method based on the remaining book value
It estimates accounting-style depreciation from the inputs you provide. It is not a complete US tax-depreciation engine.
Straight-Line Method
Where:
- — asset cost
- — salvage value
- — useful life in years
Straight-line depreciation is easy to read because the annual charge is constant until the depreciable base has been used.
200% Declining Balance Method
The calculator uses this yearly rate:
Year 1 depreciation is based on the original asset cost. Later years apply the same rate to the remaining book value, while the calculator prevents depreciation from pushing the book value below salvage value.
Worked Example
For an asset costing 50,000, salvage value 5,000, and useful life 10 years:
| Method | Year 1 depreciation | Year 2 depreciation | Book value after year 1 |
|---|---|---|---|
| Straight-line | 4,500 | 4,500 | 45,500 |
| 200% declining balance | 10,000 | 8,000 | 40,000 |
The declining-balance method records more expense earlier, while straight-line spreads the expense evenly.
What This Calculator Does Not Model
US tax depreciation can involve MACRS recovery classes, conventions, bonus depreciation, Section 179 elections, business-use limits, and switching rules. Those topics are real, but they are outside this calculator's live logic.
Use this tool for simple planning or book-value comparisons. Use tax software or professional guidance when you need tax-reporting treatment.
Frequently asked questions
What is the depreciable base?
The depreciable base is the asset cost minus salvage value. It is the total amount the calculator can expense over the asset's life.
Why is declining balance higher in the early years?
Because it applies a fixed rate to a higher book value at the start of the asset's life. As book value falls, later-year depreciation also falls.
Does this calculator handle MACRS or Section 179?
No. The live tool supports only straight-line and 200% declining balance calculations. MACRS, Section 179, bonus depreciation, and tax conventions need separate tax-specific handling.
Why can salvage value not exceed asset cost?
If salvage value is greater than cost, there is no positive depreciable base left. The calculator caps depreciation at zero in that case so book value is not forced below the stated salvage value.
