Depreciation Calculator
Enter an asset's cost, expected salvage value, and useful life to calculate annual straight-line depreciation and a year-by-year book value schedule.
How the Depreciation formula works
The straight-line depreciation formula:
Annual depreciation = (Cost − Salvage value) / Useful life (years) Book value at year n = Cost − (Annual depreciation × n)
Step-by-step calculation
- Subtract the asset's expected salvage (resale) value from its original cost to find the total depreciable amount.
- Divide by the useful life in years to get equal annual depreciation.
- Subtract accumulated depreciation from the original cost each year to track book value over time.
Worked example
Equipment costing $40,000 with a $5,000 salvage value and 7-year useful life: Annual depreciation = (40,000 − 5,000) / 7 = $5,000/year. After 3 years, book value = 40,000 − (5,000×3) = $25,000.
Frequently asked questions
What's straight-line depreciation compared to other methods?
Straight-line spreads depreciation evenly across every year of useful life, which is the simplest method. Other methods like declining balance or units-of-production allocate more depreciation to earlier years or tie it to actual usage instead of time.
Does book value always reach exactly the salvage value?
Yes — by design, straight-line depreciation reduces book value to exactly the salvage value at the end of the asset's useful life, since the depreciable amount is spread evenly across that exact period.