| Year | Dep. Expense | Accum. Dep. | Net Book Value |
|---|
Straight-Line (SL) spreads the cost evenly over the asset's life. Same amount every year. Best for assets that wear evenly — furniture, buildings, office equipment.
Double Declining Balance (DDB) depreciates faster in early years. Good for assets that lose value quickly — vehicles, computers, machinery.
Sum-of-Years-Digits (SYD) is an accelerated method between SL and DDB. Front-loads depreciation but not as aggressively as DDB.
150% Declining Balance uses 1.5× the straight-line rate on the remaining book value — common in MACRS for certain asset classes.
Units of Production (UoP) ties depreciation directly to actual usage — ideal for machinery, vehicles, and equipment where wear relates to output.
| Asset Type | Typical Life | Common Method |
|---|---|---|
| Computers & Tech | 3–5 years | DDB or SL |
| Vehicles (car/van) | 5 years | DDB |
| Office Furniture | 7 years | SL |
| Machinery | 5–10 years | SL or UoP |
| Commercial Building | 39 years | SL (MACRS) |
| Residential Rental | 27.5 years | SL (MACRS) |
| Leasehold Improvements | 15 years | SL |
| Heavy Equipment | 7–10 years | DDB or SL |
IRS MACRS useful lives may differ. Always confirm with your tax adviser.
Fixed assets appear on the balance sheet at their gross value. Accumulated depreciation sits directly below as a contra-asset — it reduces the gross balance to arrive at net book value (NBV).
Example: Machine cost $40,000. Accumulated depreciation after 3 years = $12,000. NBV = $28,000.
When an asset is fully depreciated, its NBV equals its salvage value and stays on the books until disposed of or written off.
Accumulated depreciation never exceeds the depreciable cost (cost minus salvage value). For businesses that want to understand how well they hold onto customers alongside their asset base, our retention rate calculator gives you a clear view of customer loyalty over time.
Book depreciation follows GAAP or IFRS rules and appears in your financial statements. It reflects the actual economic use of the asset.
Tax depreciation follows local tax law (e.g., MACRS in the US). It often uses accelerated methods and bonus depreciation rules to reduce taxable income sooner.
The difference between book and tax depreciation creates a deferred tax liability or asset on the balance sheet.
Bonus depreciation and Section 179 in the US allow some businesses to deduct the full cost of qualifying assets in year one — a useful cash flow planning tool. If you manage capital projects, use our EVM calculator to track whether your asset investments are delivering on budget and schedule.
Annual depreciation rate and example annual expense for a $100,000 asset with no salvage value.
| Useful Life | Annual Rate | Year 1 Dep. $100k cost, no salvage |
After 3 Yrs (Accum.) | After 5 Yrs (Accum.) | Book Value @ 50% |
|---|
Formula: Annual Rate = 1 ÷ Useful Life. Annual Dep = Cost × Rate. Values assume zero salvage value. Actual values shown in $.
Comparison of annual depreciation expense and accumulated depreciation for a $50,000 asset over 10 years, $5,000 salvage.
| Year | SL Dep. | SL Accum. | SL Book Value | DDB Dep. | DDB Accum. | DDB Book Value |
|---|
DDB depreciates much faster in early years. After year 5, the DDB book value is about 33% lower than SL. Amounts in $.
Estimated tax benefit per year based on asset cost and tax rate (assuming straight-line, no salvage).
| Asset Cost | Life | Annual Dep. | At 15% Tax | At 21% Tax | At 25% Tax | At 30% Tax |
|---|
Tax savings = Annual Depreciation × Tax Rate. This is the reduction in tax payable, not cash received. Consult your tax adviser for actual outcomes.
A summary of common depreciation frameworks and allowed methods around the world.
| Country | Standard | Common Methods | Buildings Life | Vehicles Life | Accelerated? |
|---|---|---|---|---|---|
| 🇺🇸 USA | GAAP / MACRS | SL, DDB, 150DB | 39 yrs (MACRS) | 5 yrs | Yes (Bonus / Sec 179) |
| 🇬🇧 UK | FRS 102 / IFRS | SL, Reducing Balance | 25–50 yrs | 4–5 yrs | Annual Investment Allowance |
| 🇦🇺 Australia | AASB / ATO | SL, Diminishing Value | 40 yrs | 5–8 yrs | Instant asset write-off |
| 🇨🇦 Canada | IFRS / CCA | SL, Declining Balance | 4–10% CCA | 30% CCA | Accelerated CCA rules |
| 🇩🇪 Germany | HGB / IFRS | SL, Declining Balance | 2–3% SL | 5–6 yrs | Limited |
| 🇮🇳 India | Companies Act / IT Act | SL, Written Down Value | 5% SL (Act) | 15% WDV | Partial (IT Act) |
| 🇯🇵 Japan | J-GAAP / IFRS | SL (post-2007) | 22–50 yrs | 4 yrs | Special depreciation rules |
| 🇸🇬 Singapore | SFRS / IRAS | SL (IRAS: 1, 3, or 5 yrs) | 3% SL | 1 or 3 yrs | Startup allowances |
Rules change frequently. Always verify with your local tax authority or accountant. This table is for general reference only.
Remaining book value for assets at different cost levels and ages, straight-line method, no salvage value.
| Asset Cost | Life | After 1 Yr | After 3 Yrs | After 5 Yrs | After 10 Yrs | Fully Dep. |
|---|
NBV = Cost − (Annual Dep × Years). Fully Dep. = Year at which NBV reaches zero. Assumes no salvage value. Amounts in $.