How it’s calculated
Depreciation spreads an asset’s cost, less its salvage value, over its useful life.
Example (OpenStax, Kenzie Company): cost 58,000, salvage 10,000, 5-year life.
| Year | Straight-line | Double-declining | Sum-of-years’-digits |
|---|---|---|---|
| 1 | 9,600 | 23,200 | 16,000 |
| 2 | 9,600 | 13,920 | 12,800 |
| 3 | 9,600 | 8,352 | 9,600 |
| 4 | 9,600 | 2,528 | 6,400 |
| 5 | 9,600 | 0 | 3,200 |
Every method depreciates the same 48,000 in total; accelerated methods take more of it early. For double-declining, the final year takes any remaining amount down to salvage. This calculator uses full years (no partial-year convention).
These are financial-reporting (book) methods. U.S. tax depreciation normally uses MACRS under IRS Publication 946, which has its own recovery periods and conventions, so this is not a tax calculation.
Frequently asked questions
Which depreciation method should I use?
Straight-line suits assets used evenly over time and is the simplest. Accelerated methods (double-declining, sum-of-the-years’-digits) match assets that lose value or productivity faster early on. Your accountant or reporting framework decides.
Why is salvage value ignored in the double-declining rate?
The double-declining rate is applied to the full book value, not cost minus salvage. Salvage only acts as a floor: depreciation stops once book value reaches it.
Is this the same as tax depreciation?
No. U.S. tax returns generally use MACRS (IRS Publication 946) with set recovery periods and conventions, and may allow Section 179 or bonus depreciation. Use IRS guidance or a tax professional for tax figures.
Embed this calculator
Add this free calculator to your own website. Copy the code below into your page’s HTML:
Sources
- Principles of Accounting, Volume 1, 11.3: Explain and Apply Depreciation Methods to Allocate Capitalized Costs — OpenStax
- Introduction to Financial Analysis, 3.14: Accelerated Depreciation Methods – Sum-of-the-Years’ Digits — LibreTexts
- Publication 946: How To Depreciate Property — U.S. Internal Revenue Service
Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.
Spotted a mistake or missing option? Report a problem · GitHub issue· Suggest a calculator