Answer first
What this calculator tells you
Calculate yearly and monthly straight-line depreciation from cost, salvage value and useful life. Spread an asset's cost evenly over its life for a book schedule or a budget. Formula: Annual depreciation = (cost − salvage value) ÷ useful life. At the worked-example inputs, the yearly depreciation is $9,000. Holding every other input steady, moving purchase cost from $40,000 to $60,000 moves the result from $7,000 to $11,000.
Transparent method
The formula
Spread an asset's cost evenly over its life for a book schedule or a budget.
Worked example
Example inputs
How to interpret the result
Straight-line depreciation spreads the cost of an asset, less what it will be worth at the end, evenly across its life. A $50,000 machine with $5,000 salvage over five years loses $9,000 a year. The even slice makes budgets easy to forecast, but it ignores that most equipment loses value faster at first, which the double-declining method captures.
At the worked-example inputs the yearly depreciation is $9,000. It rises with purchase cost and falls as useful life and salvage value increase.
These are planning metrics, not audited accounting or a valuation opinion.
Before you rely on it
What to check
Confirm the useful life against what your tax preparer or standards use. The book life and the tax life are often different numbers.
The common error
Where people go wrong with straight-line depreciation calculator
Depreciating the full cost. Salvage value is subtracted first, so entering zero for it when the asset will resell overstates every yearly charge.
Sensitivity evidence
How purchase cost changes the yearly depreciation
Holding every other input at the worked-example value, moving purchase cost from $40,000 to $60,000 moves the yearly depreciation from $7,000 to $11,000: a spread of $4,000, or 44% of the worked-example result.
| Purchase cost | Yearly depreciation | Monthly depreciation | Total depreciable amount |
|---|---|---|---|
| $40,000 | $7,000 | $583 | $35,000 |
| $45,000 | $8,000 | $667 | $40,000 |
| $50,000worked example | $9,000 | $750 | $45,000 |
| $55,000 | $10,000 | $833 | $50,000 |
| $60,000 | $11,000 | $917 | $55,000 |
Every input, tested
Which input moves the yearly depreciation most
Of the 3 inputs, useful life moves the yearly depreciation most ($3,750 across the range tested) and salvage value moves it least ($200).
| Input | Tested from | To | Yearly depreciation at each end | Swing |
|---|---|---|---|---|
| Useful life | 4.0 years | 6.0 years | $11,250 to $7,500 | $3,750 (42%) |
| Purchase cost | $45,000 | $55,000 | $8,000 to $10,000 | $2,000 (22%) |
| Salvage value | $4,500 | $5,500 | $9,100 to $8,900 | $200 (2.2%) |
Two variables at once
Yearly depreciation by purchase cost and salvage value
Across the grid the yearly depreciation runs from $6,800 to $11,200. Moving purchase cost from $40,000 to $60,000 shifts it by $4,000 at the middle column, and moving salvage value from $4,000 to $6,000 shifts it by $400 at the middle row, so purchase cost is the bigger lever here.
| Purchase cost \ Salvage value | $4,000 | $5,000 | $6,000 |
|---|---|---|---|
| $40,000 | $7,200 | $7,000 | $6,800 |
| $45,000 | $8,200 | $8,000 | $7,800 |
| $50,000 | $9,200 | $9,000 | $8,800 |
| $55,000 | $10,200 | $10,000 | $9,800 |
| $60,000 | $11,200 | $11,000 | $10,800 |
The highlighted cell is the worked example: $9,000.
Step by step
The worked example, input by input
| Input | Value used | What it means |
|---|---|---|
| Purchase cost | $50,000 | Enter the purchase cost used in this calculation. |
| Salvage value | $5,000 | What the asset is expected to be worth at the end of its life. |
| Useful life | 5.0 years | How many years the asset is expected to be in service. |
| Yearly depreciation | $9,000 | |
| Monthly depreciation | $750 | |
| Total depreciable amount | $45,000 | |
Inputs, definitions and assumptions
Purchase cost
Enter the purchase cost used in this calculation. The prefilled worked-example value is $50,000.
Salvage value
What the asset is expected to be worth at the end of its life. The prefilled worked-example value is $5,000.
Useful life
How many years the asset is expected to be in service. The prefilled worked-example value is 5.0 years.
How to use this calculator
- 1Verify the inputs. Gather purchase cost, salvage value and useful life from your own documents; the prefilled values are examples.
- 2Save a baseline. The worked example puts the yearly depreciation at $9,000. Store your own version of it as Scenario A.
- 3Test one change. Start with useful life, the input with the biggest effect here: moving useful life from 4.0 years to 6.0 years takes the yearly depreciation from $11,250 to $7,500, a swing of 42% of the worked-example figure.
- 4Check the extremes. At half the example useful life (2.5 years) the yearly depreciation is $18,000; at double (10.0 years) it is $4,500.
People also ask
Frequently asked questions
How do you calculate straight-line depreciation?
Annual depreciation = (cost − salvage value) ÷ useful life. Enter purchase cost in dollars, salvage value in dollars and useful life in years. At the worked-example inputs the yearly depreciation is $9,000.
What does the straight-line depreciation result mean?
Spread an asset's cost evenly over its life for a book schedule or a budget. At the worked-example inputs the yearly depreciation is $9,000. It rises with purchase cost and falls as useful life and salvage value increase.
How much does purchase cost change the yearly depreciation?
Holding every other input at the worked-example value, moving purchase cost from $40,000 to $60,000 moves the yearly depreciation from $7,000 to $11,000, a spread of $4,000.
What are the limits of this straight-line depreciation calculator?
These are planning metrics, not audited accounting or a valuation opinion. The tables on this page test purchase cost only from $40,000 to $60,000; a value outside that range is not tabulated here.
Which input moves the yearly depreciation most in the straight-line depreciation calculator?
Ranked by how far each moves the yearly depreciation across the range tested: useful life ($3,750, 42%), purchase cost ($2,000, 22%) and salvage value ($200, 2.2%).
If I double useful life in the straight-line depreciation calculator, does the yearly depreciation double?
Doubling it from 5.0 years to 10.0 years takes the yearly depreciation from $9,000 to $4,500, which is 0.50 times the worked-example figure. So it falls instead of rising. Halving it to 2.5 years gives $18,000.
How much does salvage value matter in the straight-line depreciation calculator?
The worked example uses $5,000. With the other inputs left at the worked example, moving salvage value from $4,500 to $5,500 takes the yearly depreciation from $9,100 to $8,900, a swing of 2.2% of the worked-example figure.
How much does useful life matter in the straight-line depreciation calculator?
The worked example uses 5.0 years. Holding every other input at its worked-example value, moving useful life from 4.0 years to 6.0 years takes the yearly depreciation from $11,250 to $7,500, a swing of 42% of the worked-example figure.
Which inputs change the monthly depreciation in the straight-line depreciation calculator?
At the worked-example inputs it is $750. Purchase cost takes it from $667 to $833, salvage value takes it from $758 to $742 and useful life takes it from $938 to $625.
Which inputs change the total depreciable amount in the straight-line depreciation calculator?
At the worked-example inputs it is $45,000. Purchase cost takes it from $40,000 to $50,000 and salvage value takes it from $45,500 to $44,500.
What does OEE measure?
Overall equipment effectiveness multiplies availability, performance and quality to show how much of the possible output a machine really delivers. It shows which of the three losses is the biggest.
Sources and evidence
Free Calculators Online is independent and is not affiliated with or endorsed by the source organizations. Educational estimates only.