Return on investment
Calculate the total return on an investment, including additional costs and income received.
Saving & investingBusiness basics
Depreciation calculator
Even shiny tractors get older.
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Compare straight-line and accelerated depreciation, with a year-by-year book value schedule.
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THE MATH, WITHOUT THE MYSTERY
What’s actually happening here?
Depreciation spreads an asset’s accounting cost across its useful life. It is an allocation of cost, not a forecast of what someone will pay for the asset.
Straight-line allocates equal amounts each year. The accelerated option starts with double-declining balance: beginning book value × 2 / useful life. Each year we use the greater of that amount or the straight-line amount over the remaining life, capped so book value never falls below residual value.
THE FORMULA
Straight-line expense per year = (Cost − Residual value) / Useful life
A small example
An asset costing 10,000, with a 1,000 residual value and a 3-year life, has straight-line depreciation of (10,000 − 1,000) ÷ 3 = 3,000 each year.
Further reading
OpenStax · Depreciation methodsGOOD QUESTIONS
A few things worth knowing.
Is book value the resale price?
No. Book value is cost minus accumulated depreciation. Market value can be higher or lower.
Can I use this for a tax return?
This is a general accounting illustration, not a tax depreciation schedule. Local tax rules and permitted methods may differ.