Calculate declining balance depreciation for any asset over its useful life. Enter your asset cost, salvage value, useful life (years), and depreciation factor (e.g. 2 for double declining balance) to get a full depreciation schedule showing annual depreciation expense, accumulated depreciation, and ending book value for every year.
Year 1 Depreciation
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Annual Depreciation Rate
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Total Depreciation
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Final Book Value
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The declining balance method is an accelerated depreciation approach that applies a fixed percentage rate to the asset's remaining book value each year. Because the book value decreases over time, the depreciation expense is highest in the early years and gradually decreases — unlike straight-line depreciation which spreads the cost evenly.
Double declining balance (DDB) is the most common form of declining balance depreciation. It uses a depreciation factor of 2, meaning the annual rate is 200% of the straight-line rate. For an asset with a 5-year life, the straight-line rate is 20%, so DDB applies a 40% rate to the remaining book value each year.
The rate is calculated as: Rate = Depreciation Factor ÷ Useful Life. For example, with a factor of 2 and a 5-year life, the rate = 2 ÷ 5 = 0.40, or 40%. This rate is then multiplied by the opening book value each year to get the depreciation expense for that period.
Once the declining balance depreciation for a given year would reduce the book value below the salvage value, the depreciation is capped at the difference between the current book value and the salvage value. The asset is never depreciated below its salvage value.
Salvage value (also called residual or scrap value) is the estimated worth of an asset at the end of its useful life. It matters because depreciation calculations only recover the depreciable cost — which is the original cost minus salvage value. An asset should never be depreciated below its salvage value.
Declining balance is preferred when an asset loses value more rapidly in its early years — such as vehicles, computers, and machinery. It provides larger tax deductions in the early years of ownership, which can improve cash flow. Straight-line is better when an asset's utility is consumed evenly over its life.
The most common factors are 2 (Double Declining Balance / 200%), 1.5 (150% Declining Balance), and 1.75 (175% Declining Balance). The IRS and accounting standards often specify which factor to use for different asset classes. When in doubt, use 2 for a standard double declining balance schedule.
Not exactly. MACRS (Modified Accelerated Cost Recovery System), used for U.S. tax purposes, starts with a declining balance method (200% or 150% depending on asset class) and then switches to straight-line depreciation when that yields a higher deduction. This calculator computes pure declining balance without the MACRS switch-over rule.