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How it works
Formula & explanation
Depreciation Calculator uses the following calculation:
Straight-line: Annual = (Cost−Salvage)/Life
This is a simplified model intended for planning and education. Real-world offers from lenders, institutions, or tax authorities may include additional fees, rules, or adjustments not reflected here.
FAQ
Frequently asked questions
What's the difference between straight-line and declining balance?
Straight-line spreads depreciation evenly each year; declining balance front-loads larger deductions earlier, tapering over time.
Why does depreciation matter for taxes?
It reduces taxable income for the business, reflecting the asset's wear and loss of value over its useful life.
Does book depreciation match tax depreciation?
Not always — companies often use different methods (like straight-line) for financial reporting than for tax filings (like MACRS in the US).
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