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Depreciation Calculator Guide - Using Financial Calculator Functions

Calculate asset depreciation schedules

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Calculate asset depreciation using straight-line, declining balance, and MACRS methods. Free depreciation calculator for tax and accounting.

How to Use the Depreciation Calculator

  1. Press 2ND DEPR to access the Depreciation worksheet
  2. Select depreciation method (SL, SYD, DB, or DBX)
  3. Enter life (LIF), starting month (M01), cost (CST), and salvage value (SAL)
  4. Enter year number (YR) to compute
  5. Navigate to DEP, RBV, and RDV to see results

Understanding Asset Depreciation

The Depreciation worksheet calculates asset depreciation using various accounting methods for tax and financial reporting. It generates year-by-year depreciation schedules showing depreciation expense, remaining book value, and remaining depreciable value.

Depreciation Methods

  • SL (Straight-Line): Equal depreciation each year over asset life
  • SYD (Sum-of-Years-Digits): Accelerated depreciation, higher in early years
  • DB (Declining Balance): Percentage of book value (default 200% for double-declining)
  • DBX (DB with Crossover): Switches to SL when it produces larger depreciation

Formula & Variables

Straight-Line: Annual Depreciation = (Cost - Salvage) / Life
Input Variables:
  • LIF: Life of asset in years
  • M01: Starting month (e.g., 3.5 = mid-March)
  • CST: Cost of the asset
  • SAL: Salvage value at end of life
  • YR: Year to compute (1, 2, 3...)
  • DB%: Declining balance percent (if using DB/DBX)
Computed Variables:
  • DEP: Depreciation for the year
  • RBV: Remaining book value at year end
  • RDV: Remaining depreciable value

Example Calculations

Example: Commercial Building (Straight-Line)

Scenario: A company purchases a commercial building for $1,000,000 with a 31.5-year life and no salvage value. Depreciation begins mid-March. Calculate depreciation for the first two years.

Year 1 Calculation:

Step Input Display Description
1 2ND DEPR SL Access Depreciation worksheet
2 ↓ LIF= 0.00 Move to life
3 31.5 ENTER LIF= 31.50 Enter 31.5 year life
4 ↓ M01= 1.00 Move to starting month
5 3.5 ENTER M01= 3.50 Enter mid-March (3.5)
6 ↓ CST= 0.00 Move to cost
7 1000000 ENTER CST= 1,000,000.00 Enter building cost
8 ↓ ↓ YR= 1.00 Skip salvage (0), move to year
9 ↓ DEP= 25,132.28 Year 1 depreciation
10 ↓ RBV= 974,867.72 Remaining book value
11 ↓ RDV= 974,867.72 Remaining depreciable value

Year 2 Calculation:

Step Input Display Description
1 ↑ ↑ ↑ YR= 1.00 Return to year
2 2 ENTER YR= 2.00 Enter year 2
3 ↓ DEP= 31,746.03 Year 2 depreciation
4 ↓ RBV= 943,121.69 Remaining book value
5 ↓ RDV= 943,121.69 Remaining depreciable value
Answer: Year 1 depreciation = $25,132.28; Year 2 depreciation = $31,746.03

Note: Year 1 has lower depreciation ($25,132) because the asset was placed in service mid-year. Year 2 shows full annual depreciation ($31,746).

Frequently Asked Questions

Straight-line depreciation allocates equal amounts of depreciation expense each year over the asset's useful life. It's the simplest and most commonly used method.

Use declining balance (DB) when assets lose more value in early years, like vehicles or technology. DB provides larger tax deductions initially.

DB uses declining balance throughout the asset's life. DBX automatically switches to straight-line when it produces larger depreciation, maximizing deductions.

Enter the starting month in M01. For example, 6.5 for mid-June, 9.0 for September 1st. The calculator automatically adjusts first-year depreciation.

Salvage value is the estimated residual value of an asset at the end of its useful life. It reduces the depreciable base for all methods except declining balance.

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Disclaimer

This Financial Calculator is an independent, third-party tool provided by ryanoconnellfinance.com. It is not affiliated with, endorsed by, or connected in any way to Texas Instruments Incorporated or any of its products. All trademarks, including "BA II Plus," are the property of their respective owners. This tool is provided for educational and informational purposes only and should not be used for official examinations where specific hardware calculators are required. The accuracy of calculations is not guaranteed; verify all results.

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