Depreciation Calculator
Enter asset cost, salvage value and useful life to calculate annual straight-line depreciation and a full year-by-year book value schedule. Used for fixed asset accounting, tax planning and capital budgeting.
Enter asset cost, salvage value and useful life to calculate annual straight-line depreciation and a full book value schedule. Used for fixed asset accounting, tax planning, and capital budgeting.
Purchase price including delivery and setup
Estimated residual value at end of useful life
Expected years of productive use
Formula
Annual Depreciation = (Asset Cost − Salvage Value) ÷ Useful Life | Book Value (Year N) = Asset Cost − (Annual Depreciation × N)
Straight-line depreciation spreads the depreciable cost (asset cost minus salvage value) evenly over the asset's useful life. Each year, the same fixed amount is charged to the income statement and subtracted from the asset's book value on the balance sheet until it reaches the salvage value.
Worked Example
Manufacturing machine costs $50,000 · Salvage value $5,000 · Useful life 5 years:
Depreciable amount = $50,000 − $5,000 = $45,000
Annual depreciation = $45,000 ÷ 5 = $9,000/year
Book value Year 1 = $50,000 − $9,000 = $41,000
Book value Year 3 = $50,000 − $27,000 = $23,000
Book value Year 5 = $5,000 (= salvage value)
The $9,000 annual depreciation is a fixed cost for break-even and P&L purposes. If the machine generates $30,000 in annual contribution margin, the asset pays back its net cost in under 2 years ($45,000 ÷ $30,000 = 1.5 years).
FAQ
Frequently Asked Questions
Use this in your workflow
Use the annual depreciation figure as a fixed cost in the Break-even Calculator to find the minimum sales volume needed to cover the asset. Use the Payback Period Calculator to compare the asset's useful life against its payback period. Browse all Online Business Calculators.
When to use this calculator
- →Setting up fixed asset registers for accounting and financial reporting
- →Including annual depreciation as a fixed cost in break-even or P&L models
- →Preparing capital expenditure justifications showing book value over time
- →Planning asset replacement timing based on projected book value and residual market value