Asset Depreciation Calculator

Depreciation is the allocation of an asset's cost over time, based on its useful life. In Italy, the DM 31/12/1988 establishes the maximum deductible rates for each asset category (e.g. machinery 15-20%, software 33%, cars 20%).

Straight-Line (SL): equal quota each year, simple and common. Declining Balance (DB): higher amounts in early years, reflects greater initial use. Sum-of-Years (SYD): intermediate, accelerated but with more gradual decline. In Italy the straight-line method is most used.

It is the estimated value of the asset at the end of its useful life. For technological assets it is often zero. For industrial machinery it can be significant (e.g. scrap value). The asset cannot be depreciated below this value.

The initial value of the asset, the residual value expected at the end and the useful life in years. Those three give the yearly charge and the net book value year by year.

On a straight line the amount to depreciate is split into equal parts across the years of useful life. On a declining balance the charge is higher in the early years and falls with the book value.

The sum of years method spreads the amount with falling fractions: the first year takes the largest fraction and the last the smallest, and together they cover the whole amount.