Depreciation Calculator | Straight-Line, Double Declining & MACRS
Calculate asset depreciation using different methods including straight-line, declining balance, sum-of-years, and MACRS with our free online depreciation calculator.
Category: Financial
Depreciation Calculator
Frequently Asked Questions
What is depreciation and why is it important?
Depreciation is an accounting method that allocates the cost of a tangible asset over its useful life. It's important because it: 1) Matches expenses with revenues in financial statements, 2) Allows businesses to recover the cost of assets for tax purposes, 3) Shows the decreasing value of assets on balance sheets, and 4) Helps businesses plan for asset replacement.
What are the main methods of calculating depreciation?
The main depreciation methods are: 1) Straight-line: equal amounts each year, 2) Declining balance: accelerated depreciation with higher amounts in earlier years, 3) Sum-of-years-digits: another accelerated method based on asset life, 4) Units of production: based on actual usage, and 5) MACRS: the Modified Accelerated Cost Recovery System used for U.S. tax purposes.
Which depreciation method is best for my business?
The best method depends on your business needs: Straight-line is simplest and best for assets that depreciate steadily. Accelerated methods (declining balance, sum-of-years) are good for assets that lose value quickly in early years. MACRS must be used for U.S. tax reporting. For financial reporting, choose the method that best reflects how the asset's value decreases over time.
What is salvage value in depreciation calculations?
Salvage value (also called residual or scrap value) is the estimated value of an asset at the end of its useful life. It represents how much you expect to receive by selling or disposing of the asset when you're done using it. Depreciation calculations typically depreciate the cost of an asset down to its salvage value, not to zero.