What is the declining balance depreciation formula?

Depreciation = book value at the start of the year × rate, with rate = 1 − (salvage ÷ cost)1/life for the fixed-rate method.

Why does Excel's DB give a slightly different final value?

DB rounds the rate to three decimals, so the book value ends near, not exactly at, the salvage value.

How is the first partial year handled?

First year = cost × rate × months ÷ 12; the unused months are depreciated in an extra final year.

What is the difference from double declining balance?

Double declining balance uses a rate of 2 ÷ life and stops at salvage; the fixed-rate method derives the rate from cost and salvage.

Declining Balance Depreciation Formula

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Declining Balance Depreciation Calculator

The declining balance method charges a fixed percentage of the asset’s remaining book value each year, so depreciation is largest in the first year and shrinks every year after. In the fixed-rate version shown here, the percentage is chosen so that the book value lands exactly on the salvage value at the end of the useful life: rate = 1 − (salvage ÷ cost)^1/life.

Formula

Rate = 1 − (SalvageCost)^1/Life Depreciation_t = Book value_t−1 × Rate

Where

Rate: fixed percentage that brings the book value exactly to salvage at the end of the life (Excel DB rounds it to 3 decimals)
Book value_t−1: cost minus all depreciation taken before year t
Months: months of use in the first year (the remainder is taken in an extra final year)

Calculator

Asset cost

Salvage (residual) value

Useful life (years)

Months in the first year

Rate

Result and step-by-step solution

First-year depreciation

186,083.33

Fixed rate 31.9% of the remaining book value each year; book value after 7 years: 103,365.67.

Fixed rate
1 − (100,000.001,000,000.00)^1/6 = 0.318708, rounded to 0.319
First year
1,000,000.00 × 0.319 × 7/12 = 186,083.33
Later years
Multiply each year’s opening book value by 0.319; the final partial year uses 5/12 of a year.

Schedule

Year	Book value at start	Depreciation	Accumulated	Book value at end
1	1,000,000.00	186,083.33	186,083.33	813,916.67
2	813,916.67	259,639.42	445,722.75	554,277.25
3	554,277.25	176,814.44	622,537.19	377,462.81
4	377,462.81	120,410.64	742,947.83	257,052.17
5	257,052.17	81,999.64	824,947.47	175,052.53
6	175,052.53	55,841.76	880,789.23	119,210.77
7	119,210.77	15,845.10	896,634.33	103,365.67

How to use the formula

Excel’s DB function rounds that rate to three decimal places and lets the first year be a partial year: the first year’s depreciation is cost × rate × months ÷ 12, and when the first year is short, the remaining months are taken in an extra year at the end. The calculator reproduces that exactly, and you can switch the rounding off to use the exact rate. Because of the rounding, the final book value can differ slightly from the salvage value.

The default reproduces the example in Excel’s documentation: an asset costing 1,000,000 with a 100,000 salvage value and a 6-year life, bought with 7 months left in the first year. The rate is 0.319 and the first year’s depreciation is 186,083.33. This method needs a salvage value above zero. The more common accelerated method, which uses a rate of 2 ÷ life, is double declining balance.

Frequently asked questions

What is the declining balance depreciation formula?: Depreciation = book value at the start of the year × rate, with rate = 1 − (salvage ÷ cost)^1/life for the fixed-rate method.
Why does Excel’s DB give a slightly different final value?: DB rounds the rate to three decimals, so the book value ends near, not exactly at, the salvage value.
How is the first partial year handled?: First year = cost × rate × months ÷ 12; the unused months are depreciated in an extra final year.
What is the difference from double declining balance?: Double declining balance uses a rate of 2 ÷ life and stops at salvage; the fixed-rate method derives the rate from cost and salvage.

Last reviewed: September 26, 2026. Calculations run in your browser and were checked against numpy-financial, SciPy and published spreadsheet examples.