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Asset Depreciation Calculator

Calculate the depreciation of your business assets using different methods, track asset values over time, and make informed financial decisions.

Calculate depreciation using multiple methods
Track asset value over its useful life
Plan for asset replacement

Depreciation Calculator

R

The original purchase cost of the asset

R

The estimated value of the asset at the end of its useful life

The expected number of years the asset will be used

The accounting method used to allocate asset cost over its useful life

Understanding Asset Depreciation

Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. It represents how the economic value of an asset is used up over time and allows businesses to expense an asset's cost over the years when they benefit from its use, instead of taking a large expense when the asset is purchased.

Common Depreciation Methods

Straight Line Depreciation

The simplest and most commonly used method that spreads the cost evenly over the asset's useful life.

Annual Depreciation = (Asset Cost - Salvage Value) / Useful Life

Best for: Assets that deliver benefits evenly over their life, like buildings or furniture.

Declining Balance Depreciation

Applies a fixed percentage to the asset's remaining book value each year, resulting in higher depreciation amounts in earlier years.

Rate = (Rate% / 100) / Useful Life
Annual Depreciation = Current Book Value × Rate

Best for: Assets that lose value quickly in early years, like vehicles or computers.

Sum of Years Digits (SYD)

An accelerated depreciation method that allocates a higher percentage of depreciation in earlier years.

SYD = n(n+1)/2 (where n = useful life)
Annual Depreciation = (Asset Cost - Salvage Value) × (Remaining Life / SYD)

Best for: Assets that are most productive in early years and gradually lose efficiency.

Depreciation and Business Finances

Tax Benefits

Depreciation is a non-cash expense that reduces taxable income. By claiming depreciation, businesses can lower their tax liability while preserving cash flow. Different tax jurisdictions may allow specific depreciation methods for tax purposes, sometimes different from those used for financial reporting.

Financial Statements Impact

Depreciation affects both the income statement and balance sheet. On the income statement, it's recorded as an expense, reducing profits. On the balance sheet, accumulated depreciation reduces the book value of assets, providing a more accurate representation of the company's asset values.

South African Depreciation Guidelines

In South Africa, the South African Revenue Service (SARS) provides specific guidelines for depreciation rates and methods allowed for tax purposes:

  • SARS provides a "wear and tear" allowance based on the type of asset
  • Some common wear and tear rates include:
    • Computer equipment: 3 years (33.33% per year)
    • Office furniture: 6 years (16.67% per year)
    • Vehicles: 5 years (20% per year)
    • Buildings: 20 years (5% per year)
  • Small businesses may qualify for accelerated depreciation under Section 12E of the Income Tax Act

Note: Always consult with a qualified accountant to ensure compliance with current SARS regulations.

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*Disclaimer

Accounter does not provide accounting, tax, business or legal advice. This calculator has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or specific depreciation methods allowed by SARS.