Enter the original cost, total years past, and the total residual value into the depreciation calculator to determine the % depreciation and $ depreciation per year on average.

Depreciation Formula

The following formula is used to calculate the percent deprecation of an asset on a yearly basis.

PD = [(OC – RV) / n]/OC*100

  • Where PD is the percent deprecation
  • OC is the original cost
  • RV is the residual value
  • n is the number of years.

Depreciation Definition

Depreciation is defined as the total loss in value as a percentage of the original value of some asset, typically referred to as a depreciating asset.

How to calculate depreciation?

How to calculate the yearly depreciation of an asset

  1. Determine the initial cost

    This is the initial investment or value spent on the asset.

  2. Determine the residual value after a certain number of years

    The residual value is the worth of the asset at the current moment. The more depreciation, the less the residual value.

  3. Determine the number of year

    Enter all of the information into the calculator or formula above.

FAQ

What is depreciation?

Depreciation is the loss of value an object or asset sees over time. This is typical of products such as cars that degrade in performance over time.

Why do some cars depreciate more than others?

This could be for many reasons. Some cars are better and more reliable over time than others. Also, some cars turn into collectibles which causes their value to actually go up over time.

How can you reduce depreciation?

Take care of the asset as best you can. The better shape it is in when compared to the market, the more it will be worth and the less depreciation will occur.

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depreciation formula