Depreciation Calculator Formula & How It Works
Straight-Line: D = (Cost − Salvage) / Useful Life | Declining Balance: D = Book Value × Rate
- Cost: original purchase price of the asset
- Salvage value: estimated residual value at end of useful life
- Useful life: expected years of service
- Declining balance rate: often 2× straight-line (double declining balance)
Depreciation spreads an asset's cost over its useful life. Straight-line: equal annual depreciation — simple and predictable. Declining balance: higher depreciation early, lower later — better matches reality for many assets (cars, electronics). Sum-of-years'-digits: accelerated like declining balance. India Income Tax uses Written Down Value (WDV) method at prescribed rates.