How to Use the Depreciation Calculator

The Depreciation Calculator is a powerful tool designed to help businesses calculate the depreciation of assets over time using three common methods: Straight-Line , Declining Balance , and Sum-of-Years Digits . This tool simplifies financial reporting, tax planning, and asset management. Follow these simple steps to use the calculator:

Step 1: Enter Asset Cost

• Input the initial purchase price of the asset in the “Asset Cost (₹)” field.
• For example:
  • If you purchased equipment for ₹500,000, enter 500000.
  • This value represents the total cost of acquiring the asset, including any additional expenses like installation or shipping.

Step 2: Enter Salvage Value

• Input the estimated value of the asset at the end of its useful life in the “Salvage Value (₹)” field.
• For example:
  • If the equipment is expected to be worth ₹50,000 after its useful life, enter 50000.
  • The salvage value is the amount you expect to recover when selling or disposing of the asset.

Step 3: Enter Useful Life

• Input the number of years the asset is expected to be used in the “Useful Life (Years)” field.
• For example:
  • If the equipment will be used for 10 years, enter 10.
  • The useful life is the period over which the asset is expected to generate value for your business.

Step 4: Select Depreciation Method

• Choose a depreciation method from the dropdown menu:
  • Straight-Line : Depreciates the asset equally each year.
  • Declining Balance : Accelerates depreciation, with higher amounts in earlier years.
  • Sum-of-Years Digits : Balances higher depreciation in early years with a gradual decrease.

Step 5: Calculate Depreciation

• Click the “Calculate Depreciation” button to generate the results.
• The calculator will display:
  • Straight-Line : Annual depreciation and total depreciation over the asset’s life.
  • Declining Balance : Yearly depreciation amounts.
  • Sum-of-Years Digits : Yearly depreciation amounts.

Understanding the Results

• Straight-Line Depreciation : Provides consistent depreciation each year, making it simple to track and plan.
• Declining Balance Depreciation : Front-loads depreciation, which is useful for tax purposes and aligns with higher wear and tear in early years.
• Sum-of-Years Digits Depreciation : Balances higher depreciation in early years but decreases gradually, offering a middle ground between Straight-Line and Declining Balance.