Straight-line, declining balance and sum-of-years-digits methods.
When a business buys equipment, vehicles, or other long-term assets, accounting rules generally require spreading that cost out over the asset's useful life rather than expensing it all at once. This is called depreciation, and there are several accepted methods for calculating it, each producing a different pattern of expense over time.
This tool supports the four most common approaches — Straight-Line, Declining Balance, Double Declining Balance, and Sum-of-Years-Digits — and generates a full year-by-year schedule showing depreciation, accumulated depreciation, and remaining book value.
Which method should I use?
Straight-line is simplest and most common for general accounting. Declining balance methods are often used for assets that lose value faster early on, like vehicles or technology equipment. The right choice can also depend on your local tax regulations.
What is salvage value?
The estimated resale or scrap value of the asset at the end of its useful life — the amount you expect to recover even after it's fully depreciated for accounting purposes.
Does depreciation affect cash flow?
No — depreciation is a non-cash accounting expense. The actual cash was spent when the asset was purchased; depreciation just spreads the recognition of that cost across multiple accounting periods.