Equipment Depreciation Calculator

How to Use This Calculator

Enter the original purchase price and estimated salvage value (what the equipment will be worth at the end of its useful life). Set the useful life in years and the current age. The calculator shows annual straight-line depreciation and current book value.

Why This Matters

Depreciation is a real cost that many farmers overlook because it does not require a cash outlay each year. Tracking it accurately ensures your profit and loss statement reflects the true cost of equipment ownership and helps plan for replacement timing.

Methodology

Annual depreciation = (Purchase price - Salvage value) / Useful life. Total depreciation = Annual depreciation × Current age (capped at depreciable amount). Book value = Purchase price - Total depreciation. This is straight-line depreciation, the simplest and most common method.

Common Mistakes to Avoid

• Setting salvage value at zero — most farm equipment retains 10-30% of its original value.
• Using tax depreciation (MACRS 5-7 years) for economic analysis instead of actual useful life (10-20 years).
• Not tracking depreciation per machine, which hides the true cost of older equipment.
• Ignoring that actual market value often differs significantly from calculated book value.