Free Depreciation Calculator Online
How is Depreciation Calculated?
Use our free online asset depreciation calculator to work out the depreciation of the fixed assets for your business. Depreciation is a way to reduce an asset’s value over a longer period of time. An example is over three or five years.
Assets of a business have a useful life, and you will need to know either how many years to depreciate or the percentage.
Fixed Asset Register
A fixed asset register is an important tool for businesses, as it enables them to keep track of their tangible assets such as property, equipment, and vehicles. This register allows businesses to know what assets they own, the cost of each asset, the location and when it was purchased.
Keeping a clear record of all your physical assets can really help businesses spot any missing items and stop theft in its tracks. Having a fixed asset register helps businesses get the most out of their assets while cutting down on the risks involved. To assist with this, we have developed a free fixed asset register.
Methods to Calculate Depreciation
There are two main methods which are used to calculate depreciation. If you are unsure which method to use, have a look at straight-line depreciation and reducing balance depreciation.
The straight-line method reduces the balance by the same amount each year and is the most common method. The reducing method reduces the amount by a percentage each year. The following year it reduces from the end balance from the previous year.
When you have a depreciation method in place, you should continue to use the same process for all the assets unless an accountant has advised otherwise.
Depreciation Calculation Using Xero
Xero offers a range of features that can be used to calculate depreciation, making it an efficient and reliable tool for businesses.
The first step is to set up fixed assets in Xero , which involves entering the asset’s purchase date, cost, and expected useful life. Xero then automatically calculates the depreciation amount based on the chosen method, whether it be straight-line or reducing balance.
This eliminates the need for manual calculations and reduces the chances of errors. Additionally, Xero allows for easy tracking of assets’ current book value and accumulated depreciation over time.
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Straight Line Method of Depreciation Calculator UK
If you use the straight-line depreciation method and want to calculate for more than one asset, why not download our free Excel template depreciation schedule?
Depreciation Calculators Instructions
To use this calculator, first, enter the cost price of the fixed asset, then enter the number of years you plan to use the asset.
If your calculation requires a residual value at the end of the asset life, you will need to reduce the asset value by the residual value and enter that figure.
The calculator results will show you the depreciation per year and month. Post these figures as a journal to your accounts; this will reduce your asset value and increase the expenses.
Declining Balance Depreciation Calculator UK
If you are unsure of the depreciation percentage to use for depreciation, you will need to speak to an accountant to confirm the figure.
To use the declining balance depreciation calculator, you will need to enter the value of the asset and then the depreciation percentage for each year.
If your asset needs to depreciate for more than 5 years, calculate the first 5 years. Take the final written-down value from year 5 and enter it into the asset value. It will then calculate the next 5 years.
The below image shows the difference between the straight line and reducing balance depreciation. As you can see, the straight line is consistent each year, while the reducing balance depreciates more in the early years.
Return from the depreciation calculator to depreciation page.
