Depreciation Calculator

Straight line unless you have a reason not to. It is the easiest to explain and the default under most accounting standards. Declining balance and sum of years front-load the charge, which matches assets that genuinely lose most of their value early, such as vehicles and computers. Units of production ties the charge to output and is the honest choice for machinery whose life is measured in hours rather than years.

Because the rate is applied to book value and never touches salvage, so left alone the arithmetic will write the asset below what it is worth. Depreciation stops at salvage, which makes the final year a partial charge rather than the full computed amount. On a 50,000 asset with 5,000 salvage over five years the last charge is 1,480 rather than 2,592, and a calculator that applies the full amount ends at 3,888.

The Modified Accelerated Cost Recovery System, which is what US tax returns use. It is not an accounting method: it ignores salvage value entirely, writes the asset down to zero, and assigns a fixed class life by asset type rather than letting you estimate one. A tax schedule and a book schedule for the same asset will not match, and are not meant to.

They are 200 percent declining balance for property up to ten years and 150 percent above that, switching to straight line in whichever year gives the larger deduction, with a half-year convention that treats every asset as bought mid-year. That convention is why a five-year class has six years of percentages and why the first and last are roughly half the others.

What you expect the asset to be worth when you are finished with it, and it is the part of the cost you never depreciate. Estimating it at zero is common and is a real choice rather than a simplification: it increases the annual charge and reduces reported profit.