Straight-Line Depreciation Calculator

What the Straight-Line Depreciation Calculator Does

This calculator works out how much value a fixed asset loses each year using the straight-line method, the simplest and most widely used depreciation approach in accounting. You enter three numbers: the asset's cost, its expected salvage (residual) value, and its useful life in years. It returns the equal amount you write off every full year.

It is built for small-business owners, bookkeepers, accounting students, and anyone preparing financial statements or a tax schedule who wants a quick, consistent depreciation figure without building a spreadsheet from scratch.

How Straight-Line Depreciation Works (The Formula)

Straight-line depreciation spreads the cost of an asset evenly across its useful life. The amount you deduct is identical every year. The formula is:

Annual depreciation = (Cost − Salvage value) ÷ Useful life in years

The numerator (Cost − Salvage value) is called the depreciable base: it is the portion of the asset's price you actually expect to use up. Salvage value is what you think the asset will be worth when you retire or sell it. If you expect nothing back, salvage value is zero and the full cost is depreciated.

Worked Example With Real Numbers

Suppose a company buys a delivery van for $30,000. It expects to use the van for 5 years and then sell it for $5,000 (the salvage value).

Depreciable base = $30,000 − $5,000 = $25,000. Annual depreciation = $25,000 ÷ 5 = $5,000 per year.

Each year the van's book value falls by $5,000:

• End of Year 1: $30,000 − $5,000 = $25,000
• End of Year 2: $20,000
• End of Year 3: $15,000
• End of Year 4: $10,000
• End of Year 5: $5,000 (equals the salvage value, where depreciation stops)

Factors That Affect the Result

Three inputs drive the entire calculation, so accuracy depends on realistic estimates:

• Cost: include the purchase price plus costs to get the asset ready for use, such as delivery, installation, and setup fees.
• Salvage value: a higher estimate lowers the depreciable base and therefore the yearly deduction. Set it to zero if you do not expect resale value.
• Useful life: longer life means smaller annual amounts spread over more years. Tax authorities often publish standard recovery periods you may need to follow.

Common Mistakes and Practical Tips

A frequent error is forgetting to subtract salvage value, which inflates the annual figure and can over-depreciate the asset below its true residual worth. Another is depreciating land, which is not depreciable because it does not wear out.

If you place an asset in service partway through the year, you typically prorate the first year (for example, six months of use means half the annual amount), and many tax systems apply specific conventions such as the half-year or mid-month rule. Keep your cost, salvage, and useful-life assumptions documented so the schedule is defensible during an audit, and remember that straight-line is only one option. Accelerated methods like declining balance front-load deductions and may better match assets that lose value quickly.