Calculators

Financial

Depreciation

Calculator Use

Use this calculator to calculate and print an accelerated depreciation schedule of an asset for a specified period.  A depreciation factor of 200% of straight line depreciation, or 2, is most commonly called the Double Declining Balance Method.  Use this calculator, for example, for depreciation rates entered as 1.5 for 150%, 1.75 for 175%, 2 for 200%, 3 for 300%, etc.

Inputs

Asset Cost

the original value of your asset or the depreciable cost; the necessary amount expended to get an asset ready for its intended use

Salvage Value

the value of the asset at the end of its useful life; also known as residual value or scrap value

Useful Life

the expected time that the asset will be productive for its expected purpose

Depreciation Factor

this factor is used to calculate the depreciation rate per year. For example, 2 is 200% and commonly called double declining depreciation.

Placed in Service

select the month and enter the year the asset started being used for its intended purpose

Year

enter 1 or 4 digits; enter a four digit year to use your actual years OR enter a 1 to list years using digits 1 through the last year

Fiscal Year

The starting and ending months for your fiscal year, your tax year. For personal tax filing with the IRS, your likely fiscal year is Jan-Dec, a regular calendar year. Some companies may have fiscal years that run, for example, Sep-Aug. The US Government fiscal year is Oct-Sep.

Convention

choose Full-Month, Mid-Month, Mid-Year or Mid-Quarter Convention; if you don't know, keep it at the common Full-Month

Sample Full Depreciation Schedule

Cost: $575,000.00, Salvage: $5,000.00, Life: 10 years, Factor: 1.5
Convention: Full-Month, First Year: 5 months

Declining Balance Depreciation Formulas

The declining balance calculation does not consider the salvage value in the depreciation of each period however, if the book value will fall below the salvage value, the last period might be adjusted so that it ends at the salvage value.  When declining balance method does not fully depreciate an asset by the end of its life, variable declining balance method might be used instead.

1. Straight-Line Depreciation Percent = 100% / Useful Life
2. Depreciation Rate = Depreciation Factor x Straight-Line Depreciation Percent
3. Depreciation for a Period = Depreciation Rate x Book Value at Beginning of the Period
4. If the first year is not a full 12 months and is a number M months, the first and last years will be calculated
   • First Year Depreciation Rate = M/12 x Depreciation Rate
   • Last Year Depreciation Rate = (12-M)/12 x Depreciation Rate

Declining Balance Depreciation Example

Suppose you purchase an asset for your business for $575,000 and you expect it to have a life of 10 years with a final salvage value of $5,000.  You also want less than 200% of the straight-line depreciation (double-declining) at 150% or a factor of 1.5.

1. Straight-Line Depreciation Percent = 100% / 10 = 10%
2. Depreciation Rate = 1.5 x 10% = 15%
3. Depreciation for a Period = 15% x Book Value at Beginning of the Period
   • Depreciation for Period 1 = 15% x $575,000 = $86,250
   • For Periods 2 and greater, depreciation is 15% x ($575,000 - Accumulated Depreciation )
   • Depreciation for Period 2 = 15% x ($575,000 - $86,250 ) =  $73,313
   • Depreciation for Period 3 = 15% x ($575,000 - $159,563 ) = $62,316
   • Etc ....

Full-Month, Mid-Month, Mid-Year, Mid-Quarter Conventions

Some accounting systems allow for Full-Month, Mid-Month, Mid-Year or Mid-Quarter Conventions.

• For full month convention, for example, an asset placed in service in October will have 3 months in the first year to cover all of October, November and December.
• For mid month convention, for example, an asset placed in service in October will have 2.5 months in the first year to cover 1/2 of October and all of November and December.
• For mid year convention, for example, will have 6 months in the first and last years.
• For mid quarter convention will have 1.5, 4.5, 7.5 or 10.5 for months in first year for service starting within the 4th, 3rd, 2nd or 1st quarter respectively.

Microsoft® Excel® Functions Equivalent: DDB

The Excel equivalent function for Declining Balance Method is DDB(cost,salvage,life,period,factor). With it you can calculate depreciation for the chosen period. "factor" defaults to 2, double declining balance method, but you can change it.  To calculate depreciation by the double declining method you can use this calculator setting the factor = 2 or use our Double Declining Balance Method Depreciation Calculator.

(Microsoft® and Excel® are registered trademarks of Microsoft Corporation)

Residual value, salvage value and scrap value mean the same thing.  They refer to the value of an asset at the end of the useful life.