Depreciation Calculator

Depreciation can be calculated using several different methods.

1. Straight line depreciation method

Depreciation per year = Asset cost – Salvage value/Useful life

For example, assume that the total cost of buying a photocopy machine for your office was Rs 50,000. At the end of its useful life of 5 years, the asset’s salvage value was Rs 15,000. Then, the depreciation expense would be:

(Rs 50,000 – Rs 15,000) / 5 = Rs 7,000
Thus, the photocopy machine gets depreciated by Rs 7,000 each year of its useful life.

2. Declining balance method

Depreciation per year = Book value X Depreciation rate

For example, assume that the current book value of an asset bought for the company is Rs 10,000. It has a 10 year useful life, has a salvage value of Rs 1,000, and depreciates at 30% each year.
Thus, the asset would depreciate by Rs 2,700 in the first year, by Rs 1,890 in the second year and so on.

3. Sum of the year’s digit depreciation method

Depreciation = (Asset cost – Salvage value) X factor

1st year: factor = n/1+2+3+…n
2nd year: factor = n – 1 /1+2+3+…n

Calculating such manually could be tasking and may not give you accurate results. A better alternative would be to use the Navi Depreciation Calculator.