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Depreciation Calculator

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Are you looking for something to help you out to determine the reduction in value of your asset? Well, your search is over. Our Depreciation calculator will estimate that for you very quickly and easily. It is designed to estimate the declination of an asset, given the purchase cost, salvage value and years.

Once you calculate the reduction in value, your business will be able to spend a part of the cost of your property each year over its recovery period.

This Depreciation calculator is quite useful in accounting. It is designed to perform operations based on; straight line, declining balance, or sum of the years digits method. You can also calculate partial-year depreciation by setting any accounting date.

What is Depreciation?

By definition, it is the decline in value of an asset over a given time, because of some unavoidable natural elements for instance wear and tear. For example, a popcorn maker is depreciating when its efficiency to produce popcorn reduces each year, or a laptop battery is said to depreciate each year, with reduction in battery timing.

In accounting, mostly, it is about allocating the cost of an asset over a time period, usually to its valuable life. Whenever a firm purchases an asset, such as any tool, such procurements in bulk can skewer the income statement puzzlingly. This can be managed by expensing the possessions over its valuable life with the help of our depreciation expense calculator.

Means of calculation:

There are many ways to distribute devaluation amount over the useful life of an asset. No matter which technique is applied, the amount of decline is the same for all methods, only alteration is in the timing of value reduction. Note that quicker methods (such as sum of the years' digits and declining balance) can exaggeratedly reduce profit initially followed by higher profits in later standings, which can impact stated cash flows.

1) The straight line model:

It is the most common and simplest means of calculating depreciation. It is an effective way to evenly distribute the cost over the beneficial life of the asset. The formula is expressed as:

Depreciation/year = cost of asset- salvage value/ useful life

e.g. 1500$ - 300$/ 5 = 240$/year

The Salvage value is the worth of an asset, estimated at the end of its valuable life. When a product has outlived its working capacity, its remaining worth is called the salvage or scrap value. Subtract this value from purchased price of the asset then divide its useful life e.g. 5 years

2) The Declining Balance model

For some particular assets, a newer unused asset depreciates more quickly than an older asset. As these assets are used in future, their declining rate slows down over time. In these circumstances, the more accurate method at reflecting book value each year, is the declining balance method.

Depreciation/year = the Book value × the rate

Double declining balance is the most extensively used declining balance method, having twice the decline value of straight line rate. A factor 2 is used in calculation. For this method salvage values are not required in estimation. Though, reduction rate rests once the book values are equal to salvage values.

Book value: In accounting, a book value constitutes the worth of the valuables on balance sheet. It is the difference of total assets of a company and its liabilities.

3) SYD (Sum of the years` digits)

Comparable to declining balance model, SYD calculates the devaluation of assets that tends to deplete faster in value when the asset is new. It is usually more suitable than straight-line method for some assets that have greater capacity to produce in the earlier years, but slowly loses their affinity to produce as they age.

Depreciation for the Year = (Cost of asset - Salvage Value) *factor

First year:factor = n / (1st+2nd+3rd+...+ n)

second year:factor = (n-1) / (1st+2nd+3rd+...+ n)

Third year:factor = (n-2) / (1st+2nd+3rd+...+ n)

.....

last year:factor = 1 / (1st+2nd+3rd+...+ n)

Exhausting right? Don’t you worry! With our depreciation calculator in hand you can compute the declination with a lightning speed, saving your precious time.

Partial Year Model

At the beginning of the accounting year, not all the useful assets are purchased easily which can complicate the calculation. Depending on some diverse accounting rules, you can deal in a different way with the depletion of all those assets falling in the middle of the fiscal year.

One way to work this out is by using the partial year method, where declination in value is calculated accurately when assets starts working and the program scheduled in which the value reduction occurs. To calculate it, just select the option yes as an input in order to use partial year approach.

Our calculator will prove helpful for easy calculation of depreciation of assets, using any of the previously stated methods fulfilling your requirements in accounting and finance.


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