Depreciation calculator
See how much value an item loses each year, using straight-line, declining balance or sum-of-the-years' digits.
Results
First-year depreciation
$3,600.00
This is how much value the item loses in its first year, writing off the same amount each year over 5 years.
- Total loss in value
- $18,000.00
- Value left at the end
- $2,000.00The same as the value at the end you entered
- Average per year
- $3,600.00
Value left by year
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How it works
Depreciation spreads the cost of an item, less what it will be worth at the end, over the years you use it. Straight-line writes off the same amount each year. Declining balance writes off a fixed percent of the value left, so early years carry more, and the final year brings the value left down to your value at the end exactly. Sum-of-the-years' digits also puts more in the early years, falling by an equal step each year.
Formula
- Amount to write off = cost − value at the end
- Straight-line: each year = (cost − value at the end) ÷ years
- Declining balance: each year = value left at the start of the year × speed ÷ years, never below the value at the end
- Sum of years: year y = (cost − value at the end) × (years − y + 1) ÷ (years × (years + 1) ÷ 2)
Frequently asked questions
Which depreciation method should I use?
Straight-line is the simplest and suits assets that wear out evenly, such as furniture or buildings. Declining balance and sum-of-the-years' digits suit assets that lose value fastest when new, such as vehicles and computers. For tax or accounts, follow the method your local rules or your accountant require.
What does the value left mean?
It is the cost of the item minus everything written off so far, often called book value. It is what the item is carried at in your records, which can differ from what you could actually sell it for.
Why is the last declining-balance year sometimes larger?
A percent of a shrinking balance never quite reaches the value at the end on its own. To finish the schedule on time, the final year writes off whatever is left above that value, which can be more than the year before. Some accountants switch to straight-line part way through instead, which smooths the later years.
What does “how fast it loses value” do?
For declining balance, the share written off each year is this number divided by the years you use the item. A value of 2 on a five-year item gives 40% a year, known as double-declining balance. A higher number puts more of the cost into the early years.
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Results are estimates only, not financial advice. Read the disclaimer.