Calculating Depreciation: Straight-Line & Declining Balance (with Example)

The Calculate Depreciation It's easy with the right formulas. Here, you'll learn step by step how to calculate straight-line and declining-balance depreciation—including a sample calculation and a Free Excel Depreciation Calculator Download here.

Key Points at a Glance

• Straight-line depreciation = Acquisition cost ÷ useful life.
• Declining-Balance Depreciation = fixed percentage (up to 3× on a linear basis, max. 30 %) of the remaining book value.
• In the year of acquisition, to the exact month (on a pro rata temporis basis).
• Our Excel Calculator automatically generates the entire table.

Calculate Straight-Line Depreciation

The formula is: Annual Depreciation = Acquisition Cost ÷ Useful Life.

Example: A machine costs €10,000 net and has a useful life of 5 years. Annual depreciation = €10,000 ÷ 5 = 2.000 €. After five years, the machine is fully depreciated.

Calculate Declining-Balance Depreciation

Under the declining-balance depreciation method, a fixed percentage is applied to the respective remaining book value. Currently permitted: up to Three times the linear depreciation rate, up to 30 % (for purchases made between July 1, 2025, and December 31, 2027).

Example (10.000 €, 30 %):

Starting in the year when the remaining straight-line depreciation is higher, it makes sense to switch to the straight-line method—this ensures that the asset is fully depreciated. That is exactly what our calculator does automatically.

Depreciation in the Year of Acquisition (Pro Rata Temporis)

In the year of purchase, depreciation is calculated on a pro-rata basis—one-twelfth of the annual depreciation for each month or portion thereof. So, if you make a purchase in October, you depreciate 3/12 in the first year.

Accurately Tracking Assets—The Foundation of Depreciation

Any depreciation calculation requires that you know which assets you own, how much they cost, and when they were purchased. This is exactly what a well-maintained fixed asset or inventory list provides. With Inventory ONE Record each fixed asset using Cost, Date, and Useful Life via scan—the perfect basis for your depreciation. Learn more on our pages about Inventory management and to the Inventory system.

Frequently Asked Questions About Depreciation Calculations (FAQ)

How do you calculate straight-line depreciation?

The acquisition cost divided by the useful life yields the constant annual depreciation amount.

How do you calculate declining-balance depreciation?

A fixed percentage (currently up to 3× on a straight-line basis, max. 30 %) is applied annually to the remaining book value. The amounts decrease from year to year.

What does "pro rata temporis" mean?

In the year of acquisition, depreciation is calculated on a monthly basis: one-twelfth of the annual depreciation per month or portion thereof.

Is there a free depreciation calculator?

Yes, you can download our Excel depreciation calculator above for free—it automatically generates straight-line and declining-balance depreciation tables.

This article is intended for general informational purposes only and is not a substitute for tax advice. The regulations mentioned are current as of 2026; the applicable tax regulations in effect at any given time shall prevail. Please consult your tax advisor regarding your specific situation.

More Articles on Depreciation & Fixed Assets

• Depreciation (AfA) – Basics & Methods
• Depreciation Schedule – Find the Useful Life
• Calculate Depreciation – Calculator & Examples (this article)
• Low-Value Assets (LVA)
• Maintain an asset register