# Depreciation Calculator

> Computes an asset's depreciation expense for a chosen year, the accumulated depreciation and the book value, plus the full year-by-year schedule, using the straight-line, 150 % declining-balance, double-declining-balance or sum-of-the-years'-digits method.

- Calculator id: `depreciation` · Category: Finance (`finance`) · Tool name: `calculate_depreciation`
- Canonical page: https://tttkmbb.com/finance/depreciation · This document: https://tttkmbb.com/finance/depreciation.md · JSON definition: https://tttkmbb.com/finance/depreciation.json

## Purpose

Computes an asset's depreciation expense for a chosen year, the accumulated depreciation and the book value, plus the full year-by-year schedule, using the straight-line, 150 % declining-balance, double-declining-balance or sum-of-the-years'-digits method.

**Use when:** You need book (financial-statement) depreciation of equipment, vehicles or buildings over their useful life, or want to compare accelerated methods with straight-line.

**Do not use when:** You need US tax depreciation under MACRS with its conventions and class lives (IRS Publication 946 tables), or units-of-production depreciation.

## Input

| Parameter | Type | Unit | Required | Description |
| --- | --- | --- | --- | --- |
| `cost` | number |  | required | Purchase price plus costs to put the asset in service. (> 0, max 1000000000000) |
| `salvage_value` | number |  | optional, default 0 | Estimated value at the end of the useful life; must be below cost. (min 0, max 1000000000000) |
| `useful_life_years` | integer | years | required | Years over which the asset is depreciated. (min 1, max 40) |
| `method` | enum: straight_line \| declining_balance \| double_declining \| sum_of_years_digits |  | optional, default "straight_line" | Depreciation method. |
| `year` | integer |  | optional, default 1 | Year of the asset's life to report (1 = first year). (min 1, max 40) |

## Output

| Field | Type | Unit | Description |
| --- | --- | --- | --- |
| `depreciation_for_year` | number |  | Expense recognised in the requested year. |
| `accumulated_depreciation` | number |  | Total depreciation through the end of that year. |
| `book_value_end_of_year` | number |  | cost − accumulated_depreciation. |
| `depreciable_base` | number |  | cost − salvage_value. |
| `annual_rate_percent` | number | % | Straight-line 100/life of the base; declining balance 150/life or 200/life of the opening book value; SYD the year's fraction of the base. |
| `method_used` | string |  | Name of the method applied. |
| `schedule` | list |  | One row per year: year, depreciation, accumulated, book_value (at most 40 rows). |

## Formula

`base = cost − salvage. Straight-line: D_y = base / life. Declining balance: D_y = max(book_{y−1} × f/life, (book_{y−1} − salvage)/(life − y + 1)) with f = 1.5 or 2, never below salvage. Sum-of-years-digits: D_y = base × (life − y + 1) / (life × (life + 1) / 2).`

Full-year convention (the asset is placed in service at the start of year 1). Declining-balance methods switch to straight-line over the remaining life when that gives a larger deduction, as in IRS Publication 946, which also guarantees the book value ends exactly at salvage.

## Data Sources

- IRS Publication 946 – How To Depreciate Property — https://www.irs.gov/publications/p946 (government, retrieved 2026-09-24)
- Investopedia – Double-Declining Balance (DDB) Depreciation Method — https://www.investopedia.com/terms/d/double-declining-balance-depreciation-method.asp (reference, retrieved 2026-09-24)
- Wikipedia – Depreciation — https://en.wikipedia.org/wiki/Depreciation (reference, retrieved 2026-09-24)

Data freshness: `static`. Deterministic formula with fixed constants; results never go stale. Inputs supplied by the caller determine the output.

## API

- `GET https://tttkmbb.com/api/v1/calculate/depreciation?cost=…&useful_life_years=…`
- `POST https://tttkmbb.com/api/v1/calculate/depreciation` with JSON body `{"inputs": {…}}`
- Response: unified envelope (`success`, `request`, `result.values`, `result.units`, `sources`, `freshness`, `timestamp`, `next_actions`, `links`); see https://tttkmbb.com/docs/response-format.md
- Schema: https://tttkmbb.com/api/v1/calculators/depreciation · OpenAPI operationId `calculate_depreciation` in https://tttkmbb.com/openapi.json
- Authentication: none. Rate limit: fair use, see https://tttkmbb.com/docs/rate-limits.md.

## MCP

- Server: `https://tttkmbb.com/mcp` (Streamable HTTP, JSON-RPC 2.0, no auth)
- Tool:  `run_calculator` with `{"calculator_id": "depreciation", "inputs": {…}}`

## Example

- 10,000 cost, 1,000 salvage, 5 years, straight-line, year 3: inputs `{"cost":10000,"salvage_value":1000,"useful_life_years":5,"method":"straight_line","year":3}` → `{"depreciation_for_year":1800,"accumulated_depreciation":5400,"book_value_end_of_year":4600,"depreciable_base":9000,"annual_rate_percent":20,"method_used":"Straight-line"}`
- 10,000 cost, 1,000 salvage, 5 years, double-declining, year 2: inputs `{"cost":10000,"salvage_value":1000,"useful_life_years":5,"method":"double_declining","year":2}` → `{"depreciation_for_year":2400,"accumulated_depreciation":6400,"book_value_end_of_year":3600,"annual_rate_percent":40,"schedule":[{"year":1,"depreciation":4000,"accumulated":4000,"book_value":6000},{"year":2,"depreciation":2400,"accumulated":6400,"book_value":3600},{"year":3,"depreciation":1440,"accumulated":7840,"book_value":2160},{"year":4,"depreciation":864,"accumulated":8704,"book_value":1296},{"year":5,"depreciation":296,"accumulated":9000,"book_value":1000}]}`

```
GET https://tttkmbb.com/api/v1/calculate/depreciation?cost=10000&salvage_value=1000&useful_life_years=5&method=straight_line&year=3
```

## Limitations

You need US tax depreciation under MACRS with its conventions and class lives (IRS Publication 946 tables), or units-of-production depreciation. Full-year convention (the asset is placed in service at the start of year 1). Declining-balance methods switch to straight-line over the remaining life when that gives a larger deduction, as in IRS Publication 946, which also guarantees the book value ends exactly at salvage. All values are computed from the formula above; no measurement or live data is involved.

## FAQ

**Why does double-declining balance stop early?**

It applies a fixed rate to a shrinking book value and never depreciates below salvage, so the final years are capped (296 in year 5 of the example) or switch to straight-line.

**Which method should I use?**

Straight-line is the default for financial statements; accelerated methods front-load expense for assets that lose value quickly. Tax depreciation follows separate rules (MACRS in the US).

## Related

- [NPV Calculator](https://tttkmbb.com/finance/npv.md) — Appraise the asset purchase with discounted cash flows.
- [Payback Period Calculator](https://tttkmbb.com/finance/payback-period.md) — Time to recover the asset's cost.
- [Percentage Change Calculator](https://tttkmbb.com/math/percentage-change.md) — Percent fall in value between two years.