How to use the depreciation calculator
Choose a method, then enter the asset's cost, its expected salvage (residual) value and its useful life in years. You get the depreciation for each year and the value at the end of each year. The Fixed % a year option suits things like cars, which lose a similar percentage of their value each year.
Depreciation formulas
Straight-line: (Cost − Salvage) ÷ Life, the same every year
Declining balance: Value at start of year × (Factor ÷ Life); double declining balance uses factor 2. It switches to straight-line for the remaining years once that gives more, and never goes below salvage (the same as Excel's VDB function)
Sum-of-years-digits: (Cost − Salvage) × Remaining life ÷ (1 + 2 + … + Life)
Fixed %: Value × (1 − rate)years
Worked example
An asset costs 10,000, with a salvage value of 1,000 after 5 years.
- Straight-line: (10,000 − 1,000) ÷ 5 = 1,800 a year.
- Double declining balance: 40% of the value each year: 4,000, 2,400, 1,440, 864, then 296 in the last year, which brings it exactly to 1,000.
- Sum-of-years-digits: 1 + 2 + 3 + 4 + 5 = 15, so 9,000 × 5/15 = 3,000, then 2,400, 1,800, 1,200 and 600.
A car bought for 30,000 that loses 15% a year is worth about 13,311.16 after 5 years.
Which method should I use?
Straight-line is the simplest and the most common in company accounts. Declining-balance and sum-of-years-digits put more of the cost in the early years, which suits assets like computers and vehicles that lose value fastest when new. For tax, follow your country's rules, such as MACRS in the US or the written-down value rates in India, which can give different numbers.
Working out the price of something you sell? Try the profit margin calculator.
Frequently asked questions
Why does declining balance switch to straight-line?
On its own, declining balance never quite reaches the salvage value. The usual practice, also used by Excel's VDB function, is to switch to straight-line for the remaining years once that gives a bigger amount, so the asset ends exactly at its salvage value.
Can the salvage value be zero?
Yes. Leave it empty or enter 0 if you expect the asset to be worth nothing at the end.
Formulas checked 29 October 2026. How we test our calculators. This calculator is for planning and education, not financial, tax or legal advice.