Depreciation Calculator
Every asset, whether machinery, a vehicle, or equipment, loses value over time due to wear and tear or usage.
The Depreciation Calculator helps you easily calculate this decline in asset value using standard accounting methods such as the Straight Line Method (SLM) and Declining Balance Method (DBM).
Whether you’re a business owner, accountant, or student, this calculator helps you estimate annual depreciation, book value, and asset life, enabling smarter financial planning and compliance with accounting standards.
Depreciation Calculator Highlights
| Feature | Details |
|---|---|
| Purpose | To calculate asset depreciation using different accounting methods |
| Applicable For | Machinery, vehicles, furniture, equipment, buildings, etc. |
| Inputs Required | Asset cost, salvage value, useful life, and depreciation method |
| Outputs Provided | Annual depreciation, total depreciation, and asset book value |
| Calculation Methods | Straight Line Method (SLM) and Written Down Value (WDV) |
| Accessibility | Free online calculator available 24/7 |
| Best For | Accountants, businesses, auditors, and students |
What is Depreciation
Depreciation refers to the reduction in the value of an asset over its useful life due to wear, usage, or obsolescence. In accounting, it allows companies to spread the cost of a tangible asset across its expected lifespan rather than expensing it all at once.
Depreciation helps businesses:
- Reflect accurate asset value in financial statements
- Plan asset replacement efficiently
- Claim tax deductions on capital expenses
- Maintain compliance with accounting and income tax rules
Get Personal Loan Online Up to ₹15 Lakhs
By entering your number, you're agreeing to Terms & Conditions & Privacy Policy.
Types of Depreciation Calculation Methods
There are several ways to calculate depreciation, but the most commonly used methods are:
1. Straight Line Method (SLM)
In this method, a fixed depreciation amount is charged every year over the useful life of the asset.
Formula:
Depreciation per year = (Cost of Asset − Salvage Value) / Useful Life (years)
Example:
If a machine costs ₹10,00,000, has a salvage value of ₹1,00,000, and a useful life of 9 years:
Depreciation = (10,00,000 − 1,00,000) / 9 = ₹1,00,000 per year.
2. Written Declining Balance Method
In the WDV method, a fixed percentage of depreciation is applied on the book value of the asset each year, leading to a reducing balance.
Formula:
Depreciation for the year = Book Value at Beginning of the Year × (Rate of Depreciation / 100)
Example:
If the same machine (₹10,00,000) is depreciated at 20% p.a., then:
- Year 1: ₹10,00,000 × 20% = ₹2,00,000 → Book Value = ₹8,00,000
- Year 2: ₹8,00,000 × 20% = ₹1,60,000 → Book Value = ₹6,40,000
- and so on.
The depreciation amount reduces each year under WDV, unlike the constant rate under SLM.
Get Personal Loan Online Up to ₹15 Lakhs
By entering your number, you're agreeing to Terms & Conditions & Privacy Policy.
How to Use the Depreciation Calculator
- Visit the Depreciation Calculator page.
- Enter the cost of the asset (purchase price).
- Input the salvage/residual value (expected value at the end of useful life).
- Enter the useful life (in years).
- Choose the depreciation method (Straight Line or WDV).
- The ‘Value After Depreciation’ is displayed instantly.
You’ll get:
- Annual Depreciation Value
- Depreciation Rate (if applicable)
- Final Book Value at the end of each year
- Total Depreciation accumulated over asset life
Are you looking for a personal loan?
Get Personal Loan Online Up to ₹15 Lakhs By entering your number, you're agreeing to Terms & Conditions & Privacy Policy.
Comparing Single Line & Declining Balance Method
| Details | SLM Method | DBM Method (20%) |
|---|---|---|
| Cost of Asset (₹) | 10,00,000 | 10,00,000 |
| Salvage Value (₹) | 1,00,000 | 1,00,000 |
| Useful Life (Years) | 5 | 5 |
| Year 1 Depreciation (₹) | 1,80,000 | 2,00,000 |
| Year 2 Depreciation (₹) | 1,80,000 | 1,60,000 |
| Year 3 Depreciation (₹) | 1,80,000 | 1,28,000 |
| Year 4 Depreciation (₹) | 1,80,000 | 1,02,400 |
| Year 5 Depreciation (₹) | 1,80,000 | 81,920 |
| Book Value After 5 Years (₹) | 1,00,000 | 5,27,680 |
As seen, SLM gives a constant depreciation amount, while WDV produces decreasing depreciation over time, which is preferred for assets that lose value faster initially (like vehicles or machinery).
Depreciation Rate as per Income Tax Rules in India
| Asset Type | Depreciation Rate (WDV) |
|---|---|
| Buildings (residential) | 5% |
| Buildings (non-residential) | 10% |
| Furniture and fittings | 10% |
| Plant and machinery | 15% |
| Motor cars (not used for hire) | 15% |
| Computers and software | 40% |
| Books (for educational institutions) | 100% |
(Rates based on Income Tax Act, 1961 – Appendix I, effective FY 2025–26.)
Get Personal Loan Online Up to ₹15 Lakhs
By entering your number, you're agreeing to Terms & Conditions & Privacy Policy.
Benefits of Using Depreciation Calculator
- Instant Results: No manual calculations required.
- Accurate Estimation: Built on standard accounting formulas.
- Multiple Methods: Choose between SLM and WDV as per your requirement.
- Financial Clarity: Helps assess asset replacement and resale planning.
- Free to Use: 100% free, reliable, and accessible online anytime.
Why Depreciation Matters
Understanding and calculating depreciation is essential because it affects:
- Tax deductions: Businesses can claim depreciation as an expense.
- Asset management: Knowing when to replace assets ensures efficiency.
- True profit measurement: Reflects actual operational profitability.
- Balance sheet accuracy: Depreciation affects the value of fixed assets and net worth.
Straight Line vs. Written Down Value Comparison
| Criteria | Straight Line Method (SLM) | Declining Balance Method |
|---|---|---|
| Depreciation Amount | Fixed each year | Reduces each year |
| Complexity | Simple | Slightly complex |
| Book Value at End | Equals salvage value | Reducing balance, never zero |
| Best For | Buildings, furniture | Machinery, vehicles |
| Tax Recognition | Lower in early years | Higher in early years |
Pro Tips for Accurate Depreciation Calculation
- Always use the original cost, including installation charges.
- Don’t include land cost (it’s non-depreciable).
- Update useful life as per the latest accounting or company policy.
- Keep records for tax audits and asset valuation.
- For financial analysis, compare SLM and WDV to see which fits your reporting goals.
Why Choose Buddy Loan Depreciation Calculator
- Designed using official accounting and tax principles.
- Calculates depreciation schedules automatically.
- Works for any asset type and tenure.
- Enables quick comparison between methods.
- Completely free and web-based, with no registration needed.
Whether you’re a student learning accounting or a CFO planning budgets, the Buddy Loan Depreciation Calculator ensures your calculations are accurate, fast, and compliant.
Download the Buddy Loan App Now!
One solution to each of your financial needs at your fingertip.
Scan to download now
