Depreciation Calculator
All three methods write off exactly the same total over the life of the asset. They differ only in <em>when</em> — which changes taxable income each year, and nothing else.
The Asset
Salvage value is what you expect it to be worth when you stop using it.
The total never changes, only the timing
Every method writes off cost minus salvage value across the useful life. A $50,000 asset with $5,000 salvage depreciates $45,000 in total whether you use straight line, declining balance or sum-of-years-digits. Accelerated methods simply front-load it, which reduces taxable income in early years and increases it later. The benefit is the time value of that deferral, not a larger deduction.
Double declining balance does not use salvage value in the formula
DDB applies twice the straight-line rate to the remaining book value each year, which means salvage value never enters the calculation directly. It only acts as a floor: depreciation stops once book value reaches salvage. That is why DDB schedules often need a switch to straight line in the final years, which the schedule above performs automatically.
Book depreciation is not tax depreciation
These three are accounting methods. US tax depreciation uses MACRS, which has its own prescribed recovery periods and percentage tables, plus Section 179 expensing and bonus depreciation rules that can write off the whole cost immediately. Use this page for internal book value and planning; use the IRS tables for a tax return.
Part-year conventions change the first and last year
The three schedules above assume a full first year. Real accounting rarely does. Book depreciation usually prorates by the month the asset was placed in service, while US tax depreciation applies a prescribed convention: half-year for most property, mid-quarter if more than 40 per cent of the year's additions land in the final quarter, and mid-month for real property. Each convention shifts deductions between the first and last years without changing the total, and the mid-quarter trigger surprises businesses that make a large year-end purchase.
There is also a fourth method these three do not cover. Units of production depreciates by actual usage rather than elapsed time, which suits vehicles, presses and anything whose wear tracks output instead of the calendar. It gives the truest matching of cost to revenue, at the cost of requiring a usage log. If an asset sits idle for a year, straight line still charges a full year of depreciation and units of production charges nothing.
Frequently Asked Questions
Which depreciation method should I use?
Why does double declining balance ignore salvage value?
Do accelerated methods give a bigger total deduction?
Is this the same as MACRS?
Sources
Official publications only. Links open the original document in a new tab.
- Internal Revenue Service Standard mileage rates How the IRS treats asset cost recovery
- U.S. Securities and Exchange Commission Compound interest — investor glossary Time value behind accelerated write-offs