Straight-Line
Double Declining Balance
Sum of Years' Digits (SYD)
Annual Depreciation (Year 1):$0.00
Depreciation Rate:0%
Total Depreciable Basis:$0.00
What is Depreciation?
Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. It represents how much of an asset's value has been used up. This is critical for businesses to accurately report profits and for tax deduction purposes.
Common Calculation Methods
Straight-Line Depreciation: The simplest method where the value of the asset is reduced evenly every year over its useful life.
Double Declining Balance: An accelerated depreciation method that results in higher depreciation expenses in the earlier years of an asset's life.
Sum of Years' Digits (SYD): Another accelerated method that calculates depreciation based on a fraction of the remaining life of the asset.
Example Calculation (Straight-Line)
Suppose you purchase a delivery van for $30,000. You expect to use it for 5 years, after which you believe you can sell it for $5,000 (Salvage Value).
Asset Cost: $30,000
Salvage Value: $5,000
Depreciable Basis: $30,000 – $5,000 = $25,000
Useful Life: 5 Years
Annual Depreciation: $25,000 / 5 = $5,000 per year
Why Calculate Depreciation?
Understanding depreciation helps in financial planning, determining the "book value" of assets on a balance sheet, and managing tax liabilities. By spreading the cost of expensive equipment over several years, companies can match the expense of the asset with the revenue it generates (the Matching Principle in accounting).
function calculateDepreciation() {
var cost = parseFloat(document.getElementById('assetCost').value);
var salvage = parseFloat(document.getElementById('salvageValue').value);
var life = parseFloat(document.getElementById('usefulLife').value);
var method = document.getElementById('depreciationMethod').value;
var resultDiv = document.getElementById('depreciationResult');
var annualDisplay = document.getElementById('annualResult');
var rateDisplay = document.getElementById('rateResult');
var basisDisplay = document.getElementById('basisResult');
if (isNaN(cost) || isNaN(salvage) || isNaN(life) || life cost) {
alert("Salvage value cannot be greater than the asset cost.");
return;
}
var depreciableBasis = cost – salvage;
var annualDepreciation = 0;
var rateText = "";
if (method === "straightLine") {
annualDepreciation = depreciableBasis / life;
rateText = ((1 / life) * 100).toFixed(2) + "%";
} else if (method === "doubleDeclining") {
var straightLineRate = 1 / life;
var doubleRate = straightLineRate * 2;
annualDepreciation = cost * doubleRate;
rateText = (doubleRate * 100).toFixed(2) + "%";
} else if (method === "sumOfYears") {
var sumOfYears = (life * (life + 1)) / 2;
annualDepreciation = depreciableBasis * (life / sumOfYears);
rateText = "Variable (SYD)";
}
basisDisplay.innerText = "$" + depreciableBasis.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
annualDisplay.innerText = "$" + annualDepreciation.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
rateDisplay.innerText = rateText;
resultDiv.style.display = "block";
}