How to use the depreciation calculator
- Enter the asset cost - what you paid for it.
- Enter the salvage value you expect at the end of its life.
- Enter the useful life in years.
- Read the annual and monthly depreciation and the depreciable base.
Straight-line in plain terms
The depreciable base is the cost minus salvage. Divide that by the life to get the same expense every year, which is the simplest and most common depreciation method.
A worked example
A $25,000 machine with $3,000 salvage and an 8-year life has a depreciable base of $22,000. The annual depreciation is $2,750 and the monthly expense is about $229.
Other methods exist
Declining-balance and units-of-production methods front-load or tie expense to usage. This calculator uses straight-line; switch methods with your accountant's guidance.