What is accumulated depreciation?

Accumulated depreciation is the total amount of depreciation expense charged against a fixed asset from the date it was acquired up to the current reporting date. It appears as a contra-asset on the balance sheet and reduces the gross asset value to arrive at net book value. It represents how much of an asset's cost has been recognized as an expense over time.

How do you calculate accumulated depreciation using the straight-line method?

Straight-line accumulated depreciation = Annual Depreciation × Number of Years. Annual Depreciation = (Asset Cost − Salvage Value) ÷ Useful Life in Years. For example, an asset costing $50,000 with a $5,000 salvage value over 10 years depreciates $4,500 per year. After 4 years, accumulated depreciation would be $18,000.

What is the difference between depreciation and accumulated depreciation?

Depreciation is the expense recognized in a single accounting period — for example, $5,000 for the current year. Accumulated depreciation is the running total of all depreciation charges recorded since the asset was placed in service. Depreciation is an income statement item; accumulated depreciation is a balance sheet contra-asset account.

When should I use declining balance instead of straight-line depreciation?

Use declining balance depreciation when an asset loses value faster in its early years — such as vehicles, computers, and most technology equipment. The double declining balance method depreciates at twice the straight-line rate each year on the remaining book value. Straight-line is better for assets that wear evenly over time, like buildings or furniture.

Accumulated Depreciation Calculator – Straight-Line, Declining Balance & Book Value Schedule

Accumulated Depreciation Calculator

Enter asset cost, salvage value, and useful life to instantly see annual depreciation expense, total accumulated depreciation, net book value, and a full year-by-year schedule — free online asset depreciation calculator.

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GAAP-based formulas

Enter Asset Details

Asset Cost ($)

Total purchase price of the asset

Salvage Value ($)

Estimated residual value at end of life

Useful Life (Years)

How long the asset will be used

Years Already Used

Age of asset so far (0 = new)

Depreciation Method

Currency Symbol

Depreciation Results

Fill in asset details and click Calculate to see accumulated depreciation, net book value, and a full year-by-year schedule.

Accumulated Depreciation (at Year —)

—

Straight-Line Method

Original Asset Cost —

Salvage Value —

Depreciable Cost —

Year 1 Depreciation —

Current Year Depreciation —

Net Book Value (NBV) —

Tax Benefit (current year) —

Remaining Life —

Year-by-Year Schedule

Year	Dep. Expense	Accum. Dep.	Net Book Value

Formula Used:
Annual Depreciation = (Cost − Salvage) ÷ Useful Life

Annual Depreciation by Year

Book Value Over Time

How Depreciation Methods Work

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.

Common Asset Useful Lives

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.

Depreciation on the Balance Sheet

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).

Tax Depreciation vs Book Depreciation

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.

Common Depreciation Questions

Accumulated depreciation is the total depreciation expense recorded against a fixed asset from the date it was acquired up to today. It is a contra-asset account on the balance sheet — it reduces the gross asset value to show the true remaining value (net book value). It grows every accounting period as new depreciation expense is added.

The Double Declining Balance (DDB) method produces the highest year-one deduction because it applies twice the straight-line rate to the full cost without reducing it by salvage value first. Sum-of-Years-Digits is second highest. Straight-line gives the smallest and most even annual deduction. For tax purposes, MACRS and bonus depreciation can allow even larger deductions under US law.

No. Accumulated depreciation can never exceed the asset's depreciable cost, which is the original cost minus the salvage value. Once an asset is fully depreciated, no further depreciation is recorded, and it stays on the books at its salvage value. If a fully depreciated asset is disposed of, both the gross cost and the accumulated depreciation are removed from the balance sheet.

Salvage value (also called residual value) is the estimated worth of the asset at the end of its useful life. For straight-line and sum-of-years-digits methods, you depreciate only the depreciable cost — (asset cost minus salvage value). With double declining balance, salvage value is not used in the initial calculation, but depreciation stops once the book value reaches the salvage amount.

When a partially depreciated asset is sold, you calculate the gain or loss by comparing the sale price to the net book value (NBV) at the time of sale. If the sale price is higher than NBV, you record a gain. If lower, you record a loss. Both the gross cost and accumulated depreciation are removed from the balance sheet, and the difference is recognized in the income statement.

Straight-Line Depreciation — Annual % Rate by Useful Life

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 $.

Double Declining Balance vs Straight-Line — First 5 Years

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 $.

Annual Tax Savings from Straight-Line Depreciation

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.

Depreciation Rules by Country — Quick Reference

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.

Net Book Value After N Years — Straight-Line

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 $.