This depreciation calculator allows you to calculate depreciation on any given asset. It can calculate results according to straight line, sum of year's digit and declining balance methods. The depreciation calculator can also be used for calculating partial-year depreciation as well.
In accounting terms, depreciation refers to a method that allocates assets' cost over a given time period. The period mentioned here is normally the useful life of the asset. Different methods are used for distributing depreciation amount over the useful life of an asset. Let's take a look at top few of these methods.
This method is used most widely and is also the default method used by this depreciation calculator. This method evenly distributes costs across an asset's useful life. The formula that is used in this method is:
Depreciation/Year = (Asset Cost - Salvage Value) / Useful life
TMore often than not, an asset's value decreases quickly when it's new and this depreciation rate declines as time goes on. This issue is addressed with the declining balance method for determining an asset's depreciation. Here is the formula for this method:
Depreciation per Year = Book value * Depreciation rate
And, as far as declining balance method is concerned, mostly we use double declining-method in which the rate of depreciation is double of first year value we have in the straight line method. This method doesn't include salvage value in annual depreciation of the asset. There won’t be any more depreciation as soon as book value reaches salvage value.
Just like the method described above, this one also factors in faster depreciation of the assets when they're new. Here is the formula used by this method:
Depreciation for the Year = (Cost of the Asset - Salvage Value) * factor
1st year:factor = n / (1+2+3+...+ n)
2nd year:factor = (n-1) / (1+2+3+...+ n)
3rd year:factor = (n-2) / (1+2+3+...+ n)
last year:factor = 1 / (1+2+3+...+ n) where n is useful life of the asset in years.
All these three methods are available with this depreciation calculator and it is your decision as to which one you'd like to use for the calculation of depreciation for your asset.
As with any other calculator, this depreciation calculator requires you to enter a set of values including asset cost, depreciation years, and salvage value. Besides you also have to select an appropriate depreciation method for the calculation from the list at the top. Also select if you want to round the depreciation value to dollars or not and if you’re looking for partial year depreciation calculation or not.
Once you have entered all these values, just hit the calculate button and the calculator will do the calculations and show the results right there. The result not just mentions the yearly depreciation for your asset but also shows you a table that shows yearly values for starting book value, depreciation percentage, depreciation amount, accumulated amount of depreciation and the ending book value. In case of sum of year’s digits method, as there is no specific yearly depreciation value, the calculator only shows the yearly values in the table as depreciation keeps changing through the years.
So, use this depreciation calculator for determining yearly depreciation of your asset and choose any method of your preference from the given list. The results shown by the calculator are accurate and can be relied upon regardless of the method being used.