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Depreciation Calculator: The Complete Guide

Straight-line and double declining balance. Everything you need to know — plus a free tool to do it instantly.

What is depreciation?

Depreciation allocates the cost of a tangible asset over its useful life for accounting and tax purposes. Two common methods are: Straight-Line (equal annual amounts) and Double Declining Balance (higher in early years, tapering off). The right method affects your reported profit and tax liability. DDB reduces taxable income more aggressively in early years — beneficial for cash flow.

How it works

Enter the asset cost, residual/salvage value, and useful life in years. Select straight-line or double declining balance. The tool generates a full year-by-year depreciation schedule showing annual depreciation, accumulated depreciation, and net book value.

Why it matters

Depreciation affects both your P&L (as an expense) and your Balance Sheet (as accumulated depreciation). Getting it right is essential for accurate financial statements and tax returns.

Common mistakes

Using the wrong method — check what your tax authority allows for your asset class
Forgetting to use salvage value — don't depreciate below residual value
Not tracking individual assets — use a fixed asset register

Best practices

Align your accounting depreciation with tax depreciation where possible
Review useful life estimates annually — technology assets often become obsolete faster
Use DDB for assets that lose value quickly (vehicles, tech); straight-line for buildings

Ready to put this into practice?

Use the free Depreciation Calculator to create a real depreciation in under a minute — no signup, exports to PDF and Excel.

Open Depreciation tool