Depreciation Calculator
Calculate asset depreciation using straight-line, declining balance, sum-of-years, or MACRS methods. Plan your tax deductions and financial reporting.
Depreciation Summary
First Year Depreciation
$6,429
12.9% of cost
Total Depreciation
$45,000
Over 7 years
Asset Details
Depreciation Method
Straight-Line Method
Equal depreciation each year. Formula: (Cost - Salvage) / Life
Depreciation Schedule
Book Value Over Time
Depreciation Schedule Table
| Year | Rate | Depreciation | Accumulated | Book Value |
|---|---|---|---|---|
| Beginning | - | - | $0 | $50,000 |
| Year 1 | 14.29% | $6,429 | $6,429 | $43,571 |
| Year 2 | 14.29% | $6,429 | $12,857 | $37,143 |
| Year 3 | 14.29% | $6,429 | $19,286 | $30,714 |
| Year 4 | 14.29% | $6,429 | $25,714 | $24,286 |
| Year 5 | 14.29% | $6,429 | $32,143 | $17,857 |
| Year 6 | 14.29% | $6,429 | $38,571 | $11,429 |
| Year 7 | 14.29% | $6,429 | $45,000 | $5,000 |
| Total | - | $45,000 | $45,000 | $5,000 |
Depreciation Methods Comparison
| Method | Type | Best For |
|---|---|---|
| Straight-Line | Even | Assets with consistent use |
| Declining Balance | Accelerated | Assets losing value quickly |
| Double Declining | Accelerated | Vehicles, technology |
| Sum-of-Years | Accelerated | Equipment with declining output |
| MACRS | Tax (Accelerated) | Required for US tax returns |
Quick Answer
Depreciation spreads an asset's cost over its useful life. Straight-line: (Cost - Salvage) / Years. Declining balance accelerates deductions early. MACRS is required for US tax purposes. Use our calculator for all methods.
Key Facts
- Straight-line: equal deduction each year
- Declining balance: accelerated depreciation (150% or 200%)
- MACRS: IRS required method for tax purposes
- Section 179: immediate deduction up to limits
- Bonus depreciation: 80% in 2024, phasing down
- Salvage value: estimated value at end of useful life
Frequently Asked Questions
Depreciation is the accounting method of allocating the cost of a tangible asset over its useful life. It represents how much of an asset's value has been used. Depreciation is a non-cash expense that reduces taxable income while preserving cash flow.
MACRS (Modified Accelerated Cost Recovery System) is the IRS-required tax depreciation method for most business assets. It uses predetermined rates and recovery periods (3, 5, 7, 10, 15, 27.5, or 39 years). MACRS uses accelerated methods with built-in salvage value of $0.
Book depreciation (GAAP) uses methods like straight-line for financial statements, reflecting economic reality. Tax depreciation (MACRS) follows IRS rules for tax returns, often accelerating deductions. Companies maintain two sets of depreciation records.
Salvage value (residual value) is the estimated value of an asset at the end of its useful life. It's the amount you expect to receive when selling or disposing of the asset. MACRS ignores salvage value, but GAAP methods use it to calculate depreciable basis.
For taxes: Use MACRS (required by IRS). For financial reporting: Straight-line is most common and easiest. Accelerated methods (declining balance, sum-of-years) front-load deductions for assets that lose value quickly. Choose based on asset usage pattern.
Depreciation Summary
First Year Depreciation
$6,429
12.9% of cost
Total Depreciation
$45,000
Over 7 years