Depreciation Calculator
Key takeaways
- Straight Line writes off the same ₹1,80,000.00 every year — 18% of the ₹10.00 L cost — landing on the ₹1.00 L salvage value after 5 years.
- By the end of year 3 the book value (₹4.60 L) has fallen below half the original cost.
- Written Down Value would front-load it instead: ₹3.69 L in year 1, ₹1.89 L more than the flat charge, then less every later year.
Depreciation schedule
Straight Line: the same amount is written off every year until the book value lands on the ₹1.00 L salvage value.
| Year | Depreciation | Book value at year-end |
|---|---|---|
| 1 | ₹1.80 L | ₹8.20 L |
| 2 | ₹1.80 L | ₹6.40 L |
| 3 | ₹1.80 L | ₹4.60 L |
| 4 | ₹1.80 L | ₹2.80 L |
| 5 | ₹1.80 L | ₹1.00 L |
About the Depreciation Calculator
The Depreciation Calculator works out how much value a fixed asset loses each year under either of the two methods used most often in Indian accounting: Straight Line (SLM), which spreads the loss evenly across the useful life, and Written Down Value (WDV, also called the reducing-balance method), which writes off a fixed percentage of whatever book value is left.
Enter the asset's original cost, the salvage (residual) value expected at the end of its useful life, the useful life in years, and the method. Under Straight Line the SAME rupee amount is written off every single year. Under Written Down Value the rate is solved so that after the full useful life the book value lands exactly on the salvage value — which means the early years lose more in rupee terms than the later ones, because each year's charge is a percentage of a base that has already shrunk.
"Depreciation rate" is the method's own rate: a flat percentage of the ORIGINAL cost under SLM, or the percentage applied to the REMAINING book value each year under WDV. "Year-1" and "Year-2 depreciation" are the amounts written off in the asset's first two years — identical under SLM, tapering under WDV. "Book value after year 2" is what the asset carries on the books once two years of depreciation are deducted. The schedule below extends that to the whole useful life, and the chart stacks each year's charge on the book value left after it, so the bars step down along the book-value path.
Income-tax depreciation is also written-down value, but at the rate the Income-tax Rules set for each block of assets (half that rate in the year an asset is used for less than 180 days), not one solved from a salvage value, so this schedule is not a tax computation; the Companies Act framework commonly sees SLM in a company's own financial-reporting books. This page computes whichever method you select rather than nominating one. Where the salvage value is at or above the cost, or the useful life is zero, there is nothing to spread and every output shows "—".
Frequently asked questions
How is Straight Line depreciation calculated?
Annual depreciation = (Cost − Salvage value) ÷ Useful life, and the rate is that annual amount as a percentage of the ORIGINAL cost. Because the charge never changes, year 1 and year 2 are always identical under this method, and the book value falls in a straight line to the salvage value.
How is Written Down Value depreciation calculated?
The rate is 1 − (Salvage ÷ Cost)^(1 ÷ life), chosen precisely so that applying it once a year for the full useful life brings the book value down to exactly the salvage value. Year-1 depreciation is Cost × rate; year 2 is (Cost − year-1 depreciation) × rate — smaller, because the same percentage now applies to a smaller remaining base.
What is the difference between SLM and WDV in practice?
The total written off over the full life is the same under both — the gap between cost and salvage value. What differs is the timing: SLM charges an equal amount every year, WDV front-loads the charge and tapers it. The Key takeaways card on this page states what the other method would have charged in year 1 at your own numbers.
What is salvage value?
The amount the asset is expected to be worth at the end of its useful life — scrap value, resale value, or the residual assumed in the accounting policy. It is the floor the book value falls to, so raising it lowers the total depreciation and every year's charge. Setting it at or above the cost leaves nothing to depreciate, which the page shows as "—".
Does this calculator use the Companies Act or Income Tax Act rates?
Neither — it uses the useful life and salvage value you enter. Schedule II of the Companies Act 2013 prescribes useful lives for financial reporting, and the Income Tax Act prescribes WDV block rates for tax; both are inputs to this arithmetic rather than something the page looks up. Enter the life and residual value your own policy or the applicable schedule specifies.
Why does the useful life have to be at least a year?
Because both rate formulas divide by it, and a life of zero divides by zero. The field starts at one year for that reason. Note that with a one-year life the "year 2" figures continue the formula mechanically past full depreciation rather than flooring at the salvage value — real accounting would floor it, so treat those two figures as illustrative in that case.
Disclaimer: This calculator is for information and education only. It is not investment advice and not a recommendation, and it is not business or accounting advice. The figures follow from the prices, costs, rates and volumes you entered, and actual results vary. Every figure is computed solely by applying the formula and assumptions stated on this page to the inputs you entered.