Straight-Line Depreciation Calculator
Yearly book depreciation and book value from cost, salvage, and life.
What it does
Straight-line depreciation spreads an asset cost evenly across its working life. Each year books the same charge until the value glides from cost down to salvage. Managers like it because budgets stay flat and the math fits on one line.
The tool above needs cost, salvage value, useful life, and one year to inspect. It returns the yearly charge, the monthly slice, and the remaining book value after that year. The $12,000 default with $2,000 salvage over 5 years charges $2,000 yearly and stands at $6,000 after year 3.
The method is straight from the textbooks. OpenStax accounting defines the depreciable base as cost minus salvage and divides by life, with the IRS Publication 946 describing the same straight-line idea for patents, copyrights, and software over fixed lives. Both sources anchor the formula on this page.
Book numbers are not tax numbers. US tax depreciation mostly follows MACRS tables with conventions and bonus rules, which front load deductions differently. Use this page for books, budgets, and homework, and open the IRS booklet with a tax pro for returns.
How to use
- Type what the asset cost to buy and prepare.
- Type the salvage value it keeps at the end.
- Type the useful life in whole years.
- Pick which year end book value to see.
- Read the yearly charge first, then monthly and book.
- Rerun with a longer life to see the yearly charge fall.
Formula
- cost
- Capitalized purchase cost in dollars.
- salvage
- End of life residual value in dollars.
- life
- Useful life in years.
- k
- Year index inspected (1 through life).
Total depreciation over the full life always equals cost minus salvage: 5 years at $2,000 exactly retires the $10,000 base. Monthly is the yearly charge divided by 12 for interim statements. If estimates change mid life, GAAP spreads the remaining book over the new remaining life instead of restating the past.
Worked example
Example: $12,000 machine, $2,000 salvage, 5 years
Defaults already filled in the form.
- Depreciable base: 12,000 - 2,000 = $10,000.
- Yearly: 10,000 / 5 = $2,000.00.
- Monthly: 2,000 / 12 = $166.67.
- Three years taken: 3 x 2,000 = $6,000.
- Book after year 3: 12,000 - 6,000 = $6,000.00.
- Check: two years remain at $2,000 plus $2,000 salvage = $6,000. Matches.
Reference table
| Year end | Charge | Book value |
|---|---|---|
| Year 1 | $2,000.00 | $10,000.00 |
| Year 2 | $2,000.00 | $8,000.00 |
| Year 3 | $2,000.00 | $6,000.00 |
| Year 4 | $2,000.00 | $4,000.00 |
| Year 5 | $2,000.00 | $2,000.00 |
Limits
- Even wear assumed; heavy early use wants declining balance instead.
- Salvage and life are estimates, and wrong estimates move every figure.
- Land never depreciates and repairs expense immediately; only the asset base spreads.
- Tax MACRS timing differs, so tax books need their own schedule.
Common mistakes
- Depreciating the full cost while forgetting to subtract salvage.
- Booking a year beyond the useful life, driving book below salvage.
- Using book depreciation figures directly on a tax return.
- Changing the past when estimates revise instead of spreading forward.
- Mixing personal property into business asset schedules.
Try it yourself
Quick checks. Answers sit tucked under each question.
$25,000 van, $5,000 salvage, 10 years. Yearly and book after year 4?
Yearly $2,000.00; book 25,000 - 8,000 = $17,000.00 after year 4.
Same van, monthly charge?
$2,000 / 12 = $166.67 a month.
What if salvage were zero?
Yearly rises to $2,500 and the full $25,000 retires over 10 years.
Questions
What is straight-line depreciation?
Spreading (cost - salvage) evenly across useful life with an equal charge yearly.
What is book value?
Cost minus depreciation taken so far; what the books still carry.
What is salvage value?
The expected end of life resale or trade value.
Can book value go below salvage?
No. Depreciation stops at salvage under this method.
Is this the same as MACRS?
No. MACRS is the tax system with its own rates and conventions.
What if the life estimate changes?
Spread the remaining book over the new remaining life going forward.
Sources
- IRS Publication 946: How to Depreciate Property
- OpenStax: depreciation methods (Financial Accounting 11.3)