Annual Depreciation (Straight-Line) $9,000
Monthly Depreciation $750
Depreciation Rate 18%
Total Depreciation $45,000
Depreciation Calculator
Calculate depreciation using straight-line, declining balance, or sum-of-years methods.
Depreciation Methods
Common depreciation methods:
- Straight-Line: Equal amount each year = (Cost - Salvage) ÷ Life
- Declining Balance: Higher depreciation early, decreasing over time
- Sum-of-Years-Digits: Accelerated method based on remaining life
Example
A $50,000 asset with $5,000 salvage value over 5 years:
- Depreciable amount: $45,000
- Annual depreciation: $9,000
- Book value after year 1: $41,000
FAQ
- What is depreciation?
- Depreciation is the accounting method of allocating the cost of a tangible asset over its useful life, representing the decline in value over time.
- What is straight-line depreciation?
- Straight-line depreciation spreads the cost evenly over the asset's life. Annual depreciation = (Cost - Salvage Value) ÷ Useful Life.
- When to use declining balance?
- Use declining balance for assets that lose more value early in their life, like vehicles or technology equipment.
- What is salvage value?
- Salvage value is the estimated value of the asset at the end of its useful life, what you could sell it for.