Depreciation: Spreading an Asset Cost Over Its Life
Depreciation matches the cost of a long-lived asset to the years it serves, instead of loading the whole cost onto the year of purchase.
What is the Depreciation Calculator?
Enter cost, salvage value, useful life, and years elapsed, and the tool gives annual depreciation and current book value. This is a straight-line estimate for planning, not tax advice; tax rules and allowable methods vary, so check current rules before filing.
How to use it
- Enter asset cost and salvage value.
- Enter useful life and years elapsed.
- Click Calculate Depreciation.
Worked example
With cost 12000, salvage 2000, and 5-year life, annual depreciation is 2000, and book value after 2 years is 8000.
Why subtract salvage value first?
Salvage value is what the asset is expected to be worth at the end, so only the difference is actually used up over its life.
Frequently asked questions
Does this method fit tax reporting?
Not always. Tax authorities may require different methods or lives, so check current rules for your situation.
What if the asset lasts longer than planned?
Keep its book value at salvage value and stop depreciating, then review the life estimate for similar assets.