What is the difference between straight-line and declining balance?

Straight-line spreads the depreciable amount evenly across every year of the asset's life. Declining balance applies a fixed rate to the shrinking book value, so it front-loads the expense and depreciates more in the early years.

What is salvage value and how does it affect the calculation?

Salvage (or residual) value is what the asset is expected to be worth at the end of its life. Straight-line and sum-of-years-digits subtract it from cost before depreciating. Declining-balance methods ignore it in the rate but stop depreciating once book value reaches it.

Why does double-declining balance use a factor of 2?

Double-declining balance applies twice the straight-line rate (2 ÷ life) to the book value each year. The 150% variant uses 1.5 ÷ life. Both accelerate expense recognition for assets that lose value fastest when new.

How does sum-of-years-digits work?

Add the digits of the asset's life (for 5 years: 5+4+3+2+1 = 15). Each year's fraction is the remaining life over that sum, applied to cost minus salvage. It accelerates depreciation but more gently than double-declining balance.

Does this tool send my figures anywhere?

No. The entire schedule is computed in your browser with JavaScript. Nothing is uploaded, logged or stored.

Depreciation Method Reference

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Choosing how an asset loses value

Depreciation spreads the cost of a long-lived asset across the years it is used, matching expense to the benefit it produces. The method you choose changes the timing of that expense — even, front-loaded, or somewhere between — which affects profit and tax in each year. This reference covers the four common methods with their formulas and a live schedule you can run against your own figures.

How it works

Every method starts from three inputs: the asset cost, the salvage (residual) value, and the useful life in years.

Straight-line:   (Cost − Salvage) ÷ Life                  → equal each year
Declining bal.:  BookValue × (factor ÷ Life)              → 1.5 or 2.0 factor
Double-declining: BookValue × (2 ÷ Life)                  → steepest front-load
Sum-of-years:    (Cost − Salvage) × (Remaining ÷ SYD)     → SYD = Life(Life+1)/2

Straight-line and sum-of-years-digits depreciate the cost minus salvage in full over the asset’s life. Declining-balance methods apply their rate to the book value that remains each year and floor the book value at salvage, so the asset is never written below its residual value.

Tips and example

For a £10,000 asset, £1,000 salvage, 5-year life: straight-line gives £1,800 every year; double-declining gives £4,000 in year one and tapers off.
Use declining balance for vehicles, machinery and electronics that lose most value early; use straight-line for buildings and fixtures that wear evenly.
Double-declining schedules often switch to straight-line in the final years once that produces a larger deduction — check your local tax rules.
The salvage value is an estimate; revising it mid-life changes the remaining schedule, not the years already booked.