What is depreciation?
Depreciation is the process of spreading an asset's cost over the years it is expected to be used.
Accounting Calculator
Depreciation Calculator
Calculate straight-line depreciation from asset cost, salvage value, and useful life.
Result
Straight-line depreciation
Enter the asset cost to calculate depreciation.
Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life
Explanation
Straight-line depreciation formula
Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life
Cost is the amount assigned to the asset. Salvage value is the expected value at the end of the asset's useful life.
Useful life is the number of years the asset is expected to help the business. Depreciation expense spreads the depreciable amount evenly across those years.
This calculator is for simple straight-line depreciation, which uses the same depreciation amount each year.
Worked example
Example calculation
Cost10,000
Salvage value1,000
Useful life5 years
Depreciable amount9,000
Annual depreciation1,800
The asset has 9,000 of depreciable amount. Dividing 9,000 by 5 years gives 1,800 of depreciation expense per year.
Common mistakes
Mistakes to avoid
Using purchase price without including necessary asset costs
Entering salvage value higher than cost
Using useful life of zero
Confusing annual depreciation with accumulated depreciation
Assuming all assets use straight-line depreciation
Related tools
Connect depreciation with the rest of your accounting checks
Use the equation, ratio, and trial balance tools to keep practicing related accounting basics.
FAQ
Depreciation Calculator FAQs
What is straight-line depreciation?
Straight-line depreciation records the same depreciation expense each year over an asset's useful life.
How do you calculate annual depreciation?
Subtract salvage value from asset cost, then divide the result by the useful life in years.
What is salvage value?
Salvage value is the estimated value of the asset at the end of its useful life.
What is useful life?
Useful life is the number of years an asset is expected to provide value to the business.
Can this calculator help with accounting homework?
Yes. It can help check simple straight-line depreciation calculations, but you should still show your working.