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Calculate asset depreciation using straight-line, declining balance, or sum-of-years' digits methods.
Original purchase price
Expected value at end of life
Years of useful life
Annual Depreciation
$9,000
Depreciable Amount
$45,000
| Year | Depreciation | Accumulated Depreciation | Book Value |
|---|---|---|---|
| 1 | $9,000 | $9,000 | $41,000 |
| 2 | $9,000 | $18,000 | $32,000 |
| 3 | $9,000 | $27,000 | $23,000 |
| 4 | $9,000 | $36,000 | $14,000 |
| 5 | $9,000 | $45,000 | $5,000 |
| Year | Straight-Line | Declining Balance | Difference |
|---|---|---|---|
| 1 | $9,000 | $18,452 | $9,452 |
| 2 | $9,000 | $11,643 | $2,643 |
| 3 | $9,000 | $7,346 | -$1,654 |
| 4 | $9,000 | $4,635 | -$4,365 |
| 5 | $9,000 | $2,924 | -$6,076 |
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Straight-Line Depreciation is the simplest method. The asset depreciates by the same amount each year. It's easy to understand and calculate, making it popular for financial reporting and tax purposes. Use this when the asset loses value evenly over its useful life.
Declining Balance Depreciation assumes assets lose value faster in early years. This method applies a fixed percentage to the remaining book value each year. It's more accurate for technology and vehicles that depreciate quickly at first. It provides larger tax deductions early on.
Tax Implications: Different depreciation methods have different tax impacts. Declining balance typically reduces your taxable income more in early years. Consult with a tax professional to determine the best method for your specific assets and tax situation.
Sagery provides educational estimates, not financial advice. All projections are based on the assumptions you provide — actual results will vary. Consult a qualified financial advisor before making financial decisions.