Fixed-asset depreciation calculator using the four standard accounting methods (PSAK 16 / IAS 16) for financial reporting and tax.
Five tabs: straight-line (linear), declining balance (accelerated / DDB), sum-of-years digits (front-loaded), units of production (usage-based), and a side-by-side comparison of all four methods.
Disclaimer: Depreciation methods for tax may differ from financial accounting. Consult a CPA or tax advisor.
Calculator information
📋 How to use this calculator
- Choose a depreciation method: straight-line, declining balance, sum-of-years' digits, or units of production.
- Enter the cost (purchase price), salvage value, and useful life in years.
- For units of production, enter the total producible units and the actual units produced per year.
- For declining balance, select the factor: double (200%) or 150% declining balance.
- Click Calculate to view the annual depreciation schedule, accumulated depreciation, and ending book value.
- Use the Comparison tab to view all four methods side by side with a chart.
🧮 Depreciation Methods (US GAAP / IRS Pub. 946)
Straight-Line: D = (Cost - Salvage) / n ; DDB: D_t = NBV_t x 2/n ; SYD: D_t = (Cost - Salvage) x (n-t+1)/[n(n+1)/2] ; UOP: D_t = (Cost - Salvage) x Unit_t / Unit_total
- D = annual depreciation
- Cost = purchase price
- Salvage = estimated residual value at the end of useful life
- n = useful life in years
- NBV_t = net book value at the start of year t
- Unit_t = units produced in year t
For US tax purposes, the IRS uses MACRS (Modified Accelerated Cost Recovery System) with prescribed recovery periods. US GAAP / ASC 360 requires reviewing useful life and salvage estimates at each reporting date.
💡 Worked example: Machine $100,000, salvage $10,000, 5-year useful life (DDB vs Straight-Line)
Given:- Cost: $100,000
- Salvage value: $10,000
- Useful life: 5 years
- Method: Double Declining Balance (DDB) and Straight-Line
Steps:- Straight-Line: D = ($100,000 - $10,000)/5 = $18,000/year
- DDB rate = 2/5 = 40%
- Year 1 DDB: $100,000 x 40% = $40,000 -> NBV $60,000
- Year 2 DDB: $60,000 x 40% = $24,000 -> NBV $36,000
- Year 3 DDB: $36,000 x 40% = $14,400 -> NBV $21,600
- Year 4 DDB: $21,600 x 40% = $8,640 -> NBV $12,960
- Year 5 DDB: switch to straight-line = $12,960 - $10,000 = $2,960 -> NBV $10,000
Result: Straight-line: $18,000/year consistently. DDB is front-loaded ($40,000 in year 1 vs $2,960 in year 5). Choose DDB-style accelerated methods (e.g., MACRS) to claim larger tax deductions earlier.
❓ Frequently asked questions
When should you use straight-line vs. declining balance?
Straight-line fits assets with steady economic benefits: buildings, furniture, software. Declining balance (DDB) fits assets whose benefits decline quickly: vehicles, computers, production machinery. Straight-line is simpler and common for financial reporting, while DDB provides a larger tax shield in the early years of an asset's life.
What is the difference between book (GAAP) and tax depreciation?
Book depreciation follows US GAAP (ASC 360), using management's estimate of economic useful life and salvage value. Tax depreciation follows IRS rules, primarily MACRS under IRC Section 168, which assigns fixed recovery periods (5, 7, 15, 27.5, 39 years, etc.) and a built-in convention. The difference between the two produces a deferred tax asset or liability on the balance sheet.
How do you determine salvage value?
Salvage value is an estimate of what an asset can be sold for at the end of its useful life. Under MACRS for federal tax, salvage value is treated as zero (full depreciation of basis). For GAAP, salvage can be zero or positive. Estimation tips: check resale prices for similar used assets, assume 10-20% of cost for vehicles, 5-10% for computers, and 0% for older furniture.
What are the main MACRS recovery periods?
Under IRS Publication 946, common MACRS classes include: 5-year property (cars, light trucks, computers, office machines); 7-year property (office furniture, most machinery); 15-year property (qualified leasehold improvements, land improvements); 27.5-year property (residential rental real estate, straight-line); and 39-year property (nonresidential real property, straight-line). Section 179 expensing and bonus depreciation can accelerate deductions further.
What is Units of Production and when is it used?
Units of Production allocates depreciation based on actual output rather than time. For example, a machine that can produce 100,000 units over its life has annual depreciation = (Cost - Salvage) x actual units / 100,000. It suits mining, specialized production machinery, and aircraft (depreciated by flight hours). It is acceptable under US GAAP but is not allowed for federal tax depreciation, which generally requires MACRS.
📚 Sources & references
Last updated: May 11, 2026