Depreciation Calculator
Spread an asset’s cost across its useful life, on whichever basis your accounts or tax rules require.
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How it works
Straight line charges the same amount every year and is the simplest to explain and audit. Reducing balance applies a fixed percentage to whatever value remains, front-loading the charge — which usually matches how assets actually lose value, and is what most tax regimes require.
The choice changes the profit reported each year but never the total charged over the asset’s life. It is a timing difference, and its main practical effect is on tax paid early in the asset’s life rather than on the eventual total.
Straight line = (cost − salvage) ÷ life · Reducing = book value × rate
- Cost — purchase price plus everything needed to bring the asset into use
- Salvage value — expected disposal proceeds at the end of the useful life
- Book value — cost less accumulated depreciation at any point in time
Worked example
A 2,400,000 machine with a 240,000 salvage value over 8 years, reducing balance at 25%
Inputs
Results
The first year charges seven and a half times what the last one does. Straight line would have charged 270,000 flat every year.
Frequently asked questions
Which method should I use?
Whichever your accounting standard permits and your tax authority requires — and they are often different, which is why many businesses keep both. Straight line suits assets that wear evenly; reducing balance suits anything that loses most of its value early, such as vehicles and computers.
What rate should reducing balance use?
Usually one set by your tax authority for the asset class. Where you can choose, a rate of roughly twice the straight-line equivalent — the double declining method — is a common convention.
Can an asset depreciate below its salvage value?
No. Depreciation stops once book value reaches the salvage estimate, which is why the final years of a reducing-balance schedule are often truncated.
Is my data sent anywhere?
No. The calculation runs entirely in your browser. Nothing you type is transmitted to us or stored.
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