# Depreciation calculator (straight-line method)

This calculator can be used to calculate the depreciation expense of an asset over its useful life using the straight-line method. The straight-line method evenly spreads the cost of an asset over its expected useful lifespan.

Page written by Ian Hawkins. Last reviewed on June 21, 2024. Next review due April 6, 2025.

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This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.

Annual depreciation amount

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Monthly depreciation amount

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Depreciation period

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## Depreciation explained

In simpler terms, when a company purchases a long-term asset like machinery, buildings, vehicles, or equipment, the cost of that asset is spread out over its expected lifespan through depreciation. This reflects the fact that assets lose value over time due to wear and tear, technological advancements, and other factors.

There are different methods of calculating depreciation, with the most common being the straight-line method,Â  the declining balance method and accelerated depreciation. In the straight-line method, the cost of the asset is evenly distributed over its useful life. In the declining balance method, a higher portion of the assetâ€™s cost is depreciated in the earlier years, reflecting a faster decline in value.

## How to calculate depreciation (straight-line method)

Here’s how you can calculate depreciation using the straight-line method:

1. Determine the cost of the asset.
2. Estimate the salvage value (the value of the asset at the end of its useful life).
3. Calculate the depreciable cost by subtracting the salvage value from the cost of the asset: Depreciable cost = Cost of asset – salvage value.
4. Determine the useful life of the asset in years.
5. Divide the depreciable cost by the useful life to calculate the annual depreciation expense: Annual depreciation expense = Depreciable cost / useful life.

A depreciation calculator using the straight-line method typically requires you to input the cost of the asset, salvage value, and useful life. The calculator then provides you with the annual depreciation expense.

Using this method, the asset’s value is reduced by the same amount each year, providing a systematic way to account for the reduction in value over time. This is a common method used in accounting to allocate the cost of assets and determine their book value.