Frequently asked questions
Which depreciation method should I use?
Straight-line is simplest and most common for financial reporting. Declining balance and double-declining front-load depreciation expense, which is useful for tax purposes (more deduction early) and assets that lose value quickly (vehicles, technology).
What is salvage value?
The estimated resale or scrap value of the asset at the end of its useful life. It is the floor below which the asset is not depreciated. If you expect to dispose of the asset with no recovery, set salvage to zero.
How does double declining balance differ from regular declining?
Double declining uses a rate of 2/life (twice straight-line), while regular declining balance uses 1/life. Double declining front-loads even more expense into early years. It switches to straight-line once that produces a larger deduction.
Does this calculate tax depreciation (MACRS)?
No. This shows book depreciation using standard methods. US tax depreciation under MACRS uses different recovery periods and conventions. Consult IRS Publication 946 or a tax professional for tax-specific schedules.
Can I depreciate land?
No. Land is not depreciated because it does not wear out or become obsolete. Only the building or improvements on land can be depreciated. Separate the land cost from the total purchase price.
What useful life should I enter?
Use the period you expect to use the asset productively. Common ranges: vehicles 5–7 years, computers 3–5 years, machinery 7–15 years, buildings 27.5–39 years. For tax, specific rules may mandate the period.