Free tool
Build a full depreciation schedule for an asset with straight-line, double-declining-balance or units-of-production. Each row shows the expense, accumulated depreciation and book value, and book value never drops below salvage.
Built for Financial AccountingEnter the cost, salvage value and useful life.
Depreciation questions are mostly about not mixing up the base each method uses. Encodr keeps the straight-line, units-of-production and double-declining-balance rules on a spaced schedule.
Get started freeDepreciation allocates the cost of a tangible asset over its useful life. It does not measure market value. Book value is cost minus accumulated depreciation, and an asset is never depreciated below its salvage value, so the total expense over the life is cost minus salvage under every method.
(cost - salvage) / useful life, the same amount every year.(cost - salvage) / total estimated units, and expense = rate x units used that year. It follows usage, not time.2 x (1 / useful life), and expense = beginning-of-year book value x rate. Salvage is ignored in the multiplication,
but the limiting year expense is book value minus salvage, then $0.Worked example: a press costs $58,000 with salvage of $10,000 and a 5-year life. Straight-line is (58,000 - 10,000) / 5 = $9,600 a year. Double-declining-balance has a 40% rate, so year 1 is 58,000 x 40% = $23,200, year 2 is 34,800 x 40% = $13,920, and so on until book value reaches salvage. The methods differ in timing, not in total. See depreciation methods compared for the full side-by-side, and the whole course is in the free Financial Accounting deck.
This tool uses whole years. Partial first years (annual depreciation x months owned / 12) and revised estimates are not handled.
Straight-line, double-declining-balance and units-of-production depreciation compared on one asset, with schedules, formulas and the mistakes that cost marks.
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