Five charges for one bakery truck
This depreciation calculator loads a used bakery truck: $48,000 purchase, $8,000 expected salvage, five years.
Depreciable amount is $40,000. That pool is the only money any method is allowed to spend.
Straight line spends it evenly. $8,000 a year. Book value after year one is $40,000.
Double declining does not start from $40,000. The rate is 2 / 5, so 40%, times the full $48,000. Year one is $19,200. Book value falls to $28,800.
The declining rate stored on the form is 30%, even while straight line is the chip in front. Year one at that rate is 30% of $48,000, so $14,400. Book value, $33,600.
Sum of the years digits adds 1 + 2 + 3 + 4 + 5 = 15. Year one takes 5/15 of $40,000, which is $13,333.33. Book value, $34,666.67.
Units of production ignores the calendar. $40,000 over 200,000 expected miles is $0.20 a mile. The single-year box holds 36,000 miles, so the charge is $7,200. Book value reads $40,800 only because no earlier miles are on file.
Same truck. Five charges.
| Method | Year-1 charge | Book value after year 1 |
|---|---|---|
| Straight line | $8,000.00 | $40,000.00 |
| Declining balance at 30% | $14,400.00 | $33,600.00 |
| Double declining | $19,200.00 | $28,800.00 |
| Sum of years | $13,333.33 | $34,666.67 |
| 36,000 miles | $7,200.00 | $40,800.00 |
A light mileage year is not a cheap truck. It is a cheap year.
Sum of years and declining balance both front-load, and they front-load different things. Sum of years takes a shrinking fraction of the original $40,000: 5/15, then 4/15, then 3/15, then 2/15, then 1/15. The base never changes. Declining balance takes a fixed percent of a shrinking book value, and that percent applies to the whole book, salvage included, until the floor. That is why 30% of $48,000 ($14,400) sits close to 5/15 of $40,000 ($13,333.33) in year one, and then the two schedules peel apart. By year five, sum of years still has $2,666.67 to post and lands on salvage. The 30% method posts $3,457.44 in that same year and finishes at $8,067.36.
Front-loaded is a timing choice, not a truer picture of the miles.
Resale value and book value do different jobs. A truck often drops harder in the classifieds during year one than straight line records. That drop still does not make double declining the right entry when the life you are measuring is miles. Copy the wrong row and the loan file tells a different story about the same truck.
A 30% rate never reaches this salvage
Declining balance multiplies whatever book value is left. The charge shrinks every year. Salvage is a floor, a stop, not a target the formula walks toward.
Leave the switch off and run 30% for all five years. Year five ends at $8,067.36. Salvage was $8,000. The last $67.36 has no year left to absorb it.
Nothing is broken.
A 30% rate on a five-year life is too mild to finish the job. Double declining, at 40%, does finish:
- Year 1: charge $19,200, book $28,800
- Year 2: charge $11,520, book $17,280
- Year 3: charge $6,912, book $10,368
- Year 4: opens at $10,368. A raw 40% would be $4,147.20. The floor cuts the charge to $2,368, and the book lands on $8,000.
- Year 5: $0. The truck is already at salvage.
The switch is the other way to finish. Each year the ledger compares the declining charge with straight line on the amount still above salvage. The larger one posts. On this 30% truck, years one through four stay on the declining path. Year five flips to $3,524.80 and the book closes at $8,000.
Turn the switch on when the policy says the asset should retire at salvage. Leave it off when you want the plain rate, including the stranded remainder. Note the choice on the schedule you send. A reviewer who multiplies 30% by the opening book will not match a switched final year.
No mile log, no running total
Straight line, declining balance, and sum of years need three numbers. Cost, salvage, life.
Units of production needs a fourth, and the fourth has to be real production. Per-unit cost is the depreciable amount divided by total expected units. Here, $40,000 / 200,000 miles = $0.20.
Type 36,000 in the single-year box and the headline is $7,200. The ledger shows one row. The running total stays blank on purpose. Last year's route is unknown, so a written-off figure would be fiction.
Paste 36000, 42000, 40000, 44000, 38000 into the yearly list. Five years, five figures, 200,000 miles, the whole $40,000. Year one is still $7,200. Years two through five become $8,400, $8,000, $8,800, and $7,600. The book closes at $8,000.
The list wins if both boxes are filled. A short list is rejected. A long list is rejected. The page will not invent the missing years.
Drive the list past 200,000 miles and the extra miles post zero. Book value stops at salvage. The page does not create a negative asset.
Sell or scrap the truck before the miles are used up and the leftover depreciable amount is a disposal, tied to the sale price. That question is a return. The ROI calculator is the one that takes a sale. This ledger stops while the asset is still in service.
Book value is not the deduction
The book charge exists so a $48,000 truck does not land on a single year's profit when the route runs for five. The periods that get the use take the expense. How you split those periods is a policy.
Do not file from this page. US federal tax depreciation for most equipment follows MACRS tables, a half-year or mid-quarter convention, and sometimes Section 179 or bonus depreciation. None of those rules run here. What you see is a full-year book schedule under the method you picked.
A credit agreement that names straight line will not accept the double-declining book value. On this truck the gap in year one is $11,200, the difference between $40,000 and $28,800. Set the chip the contract names before the ledger goes into the loan file.
The tax calculator estimates tax from figures you already hold. It does not look up a recovery period, and it will not turn this schedule into a deduction.
A loan schedule is a different split, interest against principal. The amortization calculator follows the payment. The truck's depreciation method does not change what you owe the bank.
An operating lease usually leaves the asset on the lessor's books. If you do not own the truck, you do not depreciate it. The lease calculator prices the payment. Ownership decides who posts the wear.
Pennies, a one-year life, a zero salvage
Salvage has to sit below cost. Match the two and there is nothing to depreciate. Put salvage higher and the ledger stops.
A life of one year collapses the drama. Straight line, sum of years, and double declining all post the entire depreciable amount in that single year. Double declining's rate is 200%, and the salvage floor still caps the charge. Accelerated methods need at least two years before the timing differs.
Set salvage to 0 and straight line charges cost divided by life. Nothing is reserved for resale.
Each year's charge is rounded to the cent. The last year of straight line and of sum of years absorbs the leftover cent so closing book value equals salvage. A spreadsheet that keeps ten decimal places will disagree by a penny. The penny is rounding.
The currency menu changes the symbol only. It does not convert. Run the currency converter first, then type every figure in one currency. A dollar cost beside a euro salvage mixes two currencies in one subtraction, and the result is nonsense.
Inflation stays out too. The $8,000 salvage is $8,000 of future nominal dollars, not $8,000 of today's metal. The inflation calculator takes a separate question about what a sum buys later.
The math runs in the browser. Nothing typed here is uploaded or stored.
Refuse the schedule for these
- Bought in October? The ledger charges a full year. Half-year convention is a tax rule. It is not applied.
- A building and its roof share one life here. Run them as two assets when the lives differ.
- A crash in resale value does not rewrite the formula. Lower the book outside this page, then start a new run with the reduced figure as cost if you still depreciate what remains.
- Switching method mid-life means a fresh run, with the current book value typed in as cost. Averaging two methods in one schedule is not supported.
- Land is not depreciated. A price that bundles land and a building has to be split before the building's cost is typed.
- Negative cost, negative salvage, and a life above 80 years are rejected. Eighty years is the cap. A longer entry is usually a typing slip, or land hiding inside the purchase price.
Depreciation inside a product's cost moves one margin. Depreciation in overhead moves another. Once you know the bucket, margin is a separate page. This one stops at the asset.
