What is the formula for depreciation?

The three main methods of calculating depreciation are the straight-line method, reducing-balance/ declining-balance method, and the sum of years digit method.

The straight-line method spreads the cost of the asset evenly throughout its useful life and is calculated (cost - salvage value) ÷ useful life.

While reducing balance is an aggressive method where the assets depreciate twice as fast compared to the straight-line method.

The sum of years digit method adds up the asset’s expected life and each year it is divided by that figure.