Depreciation Calculator

Calculate asset depreciation using different methods. Essential for accounting, tax planning, and asset management.

How to Use Depreciation Calculator

1. 1.**Enter asset cost** (original purchase price)
2. 2.**Enter salvage value** (value at end of useful life)
3. 3.**Enter useful life** in years
4. 4.**Enter years used** (current age)
5. 5.**Select depreciation method**
6. 6.**Click "Calculate Depreciation"** to see results

Features

• •**Straight-Line Method**: Equal depreciation each year
• •**Declining Balance Method**: Higher depreciation in early years
• •**Book Value**: Current value of asset
• •**Accumulated Depreciation**: Total depreciation to date

Depreciation Methods

Straight-Line Method

Annual Depreciation = (Cost - Salvage Value) ÷ Useful Life

• •Equal depreciation each year
• •Simple to calculate and understand
• •Common for financial reporting
• •Best for assets with consistent usage

Declining Balance Method

Depreciation Rate = 2 ÷ Useful Life

Annual Depreciation = Book Value × Depreciation Rate

• •Higher depreciation in early years
• •Reflects actual usage patterns
• •Common for tax purposes
• •Never reaches zero salvage value

Common Asset Categories

Real Property

• •**Buildings**: 27.5-39 years useful life
• •**Land**: Non-depreciable
• •**Improvements**: 15-20 years
• •**Residential Property**: 27.5 years

Personal Property

• •**Vehicles**: 5 years
• •**Equipment**: 5-7 years
• •**Computers**: 5 years
• •**Furniture**: 7 years

Special Cases

• •**Software**: 3-5 years
• •**Patents**: Amortization over legal life
• •**Leasehold**: Lease term
• •**Natural Resources**: Depletion

Tax Implications

Section 179 Deduction

• •**Immediate expensing**: Up to annual limit
• •**Phase-out**: Based on total equipment purchases
• •**Bonus Depreciation**: Additional first-year deduction
• •**Vehicle Limits**: Special rules for vehicles

MACRS Depreciation

• •**Modified Accelerated Cost Recovery System**
• •**IRS required method** for tax purposes
• •**Recovery periods**: 3-39 years depending on asset
• •**Conventions**: Half-year, mid-quarter, mid-month

Depreciation Examples

Example 1: Straight-Line

• •Asset Cost: $50,000
• •Salvage Value: $5,000
• •Useful Life: 10 years
• •Annual Depreciation: ($50,000 - $5,000) ÷ 10 = $4,500

Example 2: Declining Balance

• •Asset Cost: $50,000
• •Useful Life: 5 years
• •Rate: 2 ÷ 5 = 40%
• •Year 1: $50,000 × 40% = $20,000
• •Year 2: $30,000 × 40% = $12,000

Asset Management Tips

• •**Track all assets** with purchase dates and costs
• •**Choose appropriate method** for tax and financial reporting
• •**Consider actual usage** when selecting useful life
• •**Document valuations** for salvage value
• •**Review annually** for impairment adjustments
• •**Plan replacements** based on remaining useful life

Depreciation Schedules

Annual Recording

• •**Debit Depreciation Expense**
• •**Credit Accumulated Depreciation**
• •**Balance Sheet**: Cost - Accumulated Depreciation
• •**Income Statement**: Depreciation Expense

Disposal Considerations

• •**Gain/Loss**: Sale price vs. book value
• •**Tax Consequences**: Recapture of depreciation
• •**Asset Removal**: From depreciation schedule
• •**Replacement Planning**: New asset depreciation