Use this straight-line depreciation calculator to spread the cost of a business asset evenly across its useful life. Enter the purchase cost, salvage value, and useful life to see the annual and monthly depreciation expense instantly.
How Straight-Line Depreciation Works
Straight-line is the simplest and most common depreciation method. It writes off an equal amount of an asset’s cost every year until only its salvage value remains. Cost is what you paid including setup; salvage value is what you expect it to be worth at the end; useful life is how many years you will use it.
Worked Example
A machine costs $25,000, has a $2,500 salvage value, and a 5-year life: annual depreciation = (25,000 − 2,500) ÷ 5 = $4,500 per year. After year one, the book value is $20,500.
Why It Matters
- Financial statements: depreciation spreads a large purchase across the years it helps generate revenue, matching expense to benefit.
- Taxes: depreciation is a deductible expense, though tax rules such as MACRS may use a different schedule.
- Book value: cost minus accumulated depreciation shows the asset’s remaining value on your balance sheet.
This tool uses the straight-line method. Accelerated methods (declining balance, MACRS) front-load more depreciation into the early years.