Free tool
Depreciation calculator
Work out the yearly depreciation charge and carrying amount for an asset, using the straight-line or reducing-balance method. Enter the figures and the table updates at once.
How to read the result
Each row shows one year of the asset’s life: that year’s depreciation charge, the total depreciation so far (accumulated depreciation) and the carrying amount at the year end. In the exam, show your workings. Examiners award method marks even when the final figure is slightly off.
Try the same asset with both methods and compare the charge in year one. If you are unsure which method a question wants, send it to us on WhatsApp.
The accounting behind it
Depreciation spreads the cost of a non-current asset over the years that benefit from using it, so each year carries a fair share of the cost. It does not track what the asset would sell for, and it does not move any cash. The cash left the business when the asset was bought. Each year's charge is an expense in the income statement. The running total sits in a provision for depreciation account and is deducted from cost to give the carrying amount in the statement of financial position.
The two methods suit different assets. Straight-line charges the same amount every year, which suits assets that give even service, such as fixtures. Reducing balance charges a fixed percentage of the falling carrying amount, so more is charged early. That suits assets such as vehicles, which lose value fastest when new.
Read the question carefully. A percentage "on cost" points to straight-line, while a percentage applied to the value each year points to reducing balance. Choosing the wrong method costs marks on the whole question.
When a teacher's eye helps
Under reducing balance, one year's closing carrying amount becomes the next year's opening figure, so an early error runs through every later year. Part-year purchases add another layer. If the numbers here do not match your working, we can help. One of our teachers can set out a clean depreciation schedule with you and show how the disposal entries follow from it. Book a trial class to work through your own question.
Frequently asked questions
What is the difference between straight-line and reducing-balance?
Straight-line charges the same amount each year (cost minus residual value, divided by useful life). Reducing-balance charges a fixed percentage of the carrying amount, so the charge falls each year.
What is the carrying amount?
The cost of the asset minus the accumulated depreciation to date, the value shown in the statement of financial position.
Which method should I use in the exam?
Use whichever the question specifies. If it gives a percentage and says “reducing balance”, use that; if it gives a useful life, straight-line is usually intended. Always read the requirement.
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