BIZOMAT MAKEOS · Money
Depreciation Schedule
How does this asset depreciate each year by straight-line, sum-of-years’-digits or declining balance?
Year-by-year depreciation and book value of an asset by straight-line, sum-of-the-years’-digits or double-declining-balance methods.
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How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Asset cost | AUD | Installed cost of the asset. |
| Salvage value | AUD | Expected value at the end of its life. |
| Useful life | years | Useful (or effective) life in years. |
| Method | choice | Method to schedule; tax depreciation must follow the tax authority’s rules (in Australia, ATO effective life and methods). |
What each input means
Open an input to see what it is, its units, the worked example and the common mistakes, with a small diagram.
What this means: Asset cost
- What it is
- The full cost of putting the asset into service: purchase price plus delivery, installation and commissioning.
- Units and format
- Enter a number in AUD: Australian dollars. The form accepts 0.000001 AUD or more. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 100000 AUD as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Depreciation each year rises with the cost less salvage.
- Get it right
- Use the capitalised cost your accounts record, not just the invoice price.
What this means: Salvage value
- What it is
- The amount you expect to recover for the asset at the end of its useful life, by sale or scrap.
- Units and format
- Enter a number in AUD: Australian dollars. The form accepts 0 AUD or more. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 10000 AUD as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- A higher salvage value lowers depreciation each year.
- Get it right
- It must be less than the cost; use a realistic resale or scrap value.
What this means: Useful life
- What it is
- The number of years over which the asset is depreciated, normally its useful or effective life.
- Units and format
- Enter a number in years: years. The form accepts 1 years to 50 years. Use a whole number. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 5 years as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- A longer life spreads depreciation over more years.
- Get it right
- For tax, the effective life is set by the tax authority’s rules, not by choice.
What this means: Method
- What it is
- How depreciation is spread over the years: evenly, front-loaded by the sum of the years’ digits, or front-loaded by double declining balance.
- Units and format
- Choose one of 3 options from the list: Straight line; Sum of the years’ digits; Double declining balance (200% ÷ life).
- Example
- The form opens with “Straight line” selected as a worked example. Choose the option that matches your case.
- Get it right
- Tax depreciation must follow the tax authority’s rules; check with your accountant.
Method and formulas
- Straight line: D = (cost − salvage) ÷ life.
- Sum of digits: D_t = (cost − salvage) × (life − t + 1) ÷ (life(life + 1) ÷ 2).
- Double declining: D_t = 2 ÷ life × opening book value, not taken below salvage.
- Example: $18,000 in year 1 by the selected method, leaving $10,000 at the end.
Limitations
- Accounting illustration; tax depreciation rules differ by country and asset class.
- Declining balance does not reach salvage exactly unless a switch to straight line is made.
- Example values are illustrations. Replace them with values for your actual task.
Typical uses
- Compare depreciation methods for an equipment purchase
- Estimate book value at disposal
- Build cash-flow tables for a business case
Who it is for
- Engineering managers
- Project engineers
- Finance and business analysts
What you get
- Depreciation each year
- Book value each year
- First-year depreciation
Interpreting the result
- Use the method your accountant or tax authority requires for reporting.
References
- Machinery’s Handbook, 29th edition (Industrial Press, 2012), printed pp. 139–140. Topic reference; no source tables or recommended settings are reproduced.
Learn the Concepts Behind This Tool
These BIZOMAT Library readings explain the method this tool uses, with worked examples.
Useful alongside · Library collection
Depreciation, capital spending and the weight of heavy assets
In Reading Financial Statements
What it covers: Why businesses that constantly replace plant and equipment struggle to build wealth, how depreciation and capital spending reveal this, and what it means for manufacturing ventures.
BIZOMAT tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.