Depreciation Calculator (Straight-Line & Declining Balance)
When a business buys an asset it will use for several years — machinery, a vehicle, a production line, office equipment — the purchase price is not expensed all at once. Instead it is spread across the years the asset is in use. That is depreciation. It does two jobs at the same time: it matches the cost of the asset to the periods that benefit from it, and it produces an annual tax-deductible expense that lowers your corporate income tax. Which method you pick therefore changes both your reported profit and the timing of your tax bill.
The two workhorse methods are straight-line and declining balance. Straight-line spreads the depreciable amount evenly over the useful life — simple and predictable. Declining balance front-loads the expense: each year you multiply the remaining book value by a fixed rate, so the first year is heavy and later years taper off. Take an asset that costs 500.000.000 VND, has a 50.000.000 VND salvage value and a 5-year life. Straight-line writes off a flat 90.000.000 VND a year, while double-declining balance (factor 2, a 40% rate) writes off 200.000.000 VND in year one alone — more than twice as much.
The calculator above takes the cost, salvage value, useful life and declining factor, then builds both schedules side by side and plots the book value year by year so you can compare them at a glance. One caveat: for Vietnamese tax purposes the permitted methods and useful-life ranges follow Circular 45/2013/TT-BTC and the framework set by the Ministry of Finance for each asset class. The figures here illustrate the mechanics — they are not the mandatory life or rate for your particular asset.
How the calculator works
Straight-line depreciation
Spread the depreciable amount evenly:
Annual depreciation = (Cost − Salvage value) / Useful life
| Symbol | Meaning |
|---|---|
| Cost | The asset's original cost (500.000.000 VND) |
| Salvage value | Estimated recoverable value at end of life (50.000.000 VND) |
| Depreciable base | Cost − Salvage = 450.000.000 VND |
| Useful life | Number of years in service (5) |
Each year writes off exactly 450.000.000 ÷ 5 = 90.000.000 VND, flat, until book value reaches the salvage value.
Declining-balance depreciation
Each year you depreciate the opening book value × a fixed rate:
Year-t depreciation = Opening book value × (Factor / Useful life)
With a factor of 2 (double-declining balance), the rate is 2 ÷ 5 = 40% per year. Unlike straight-line, the salvage value is not subtracted up front; instead it acts as a floor. The calculator never depreciates below 50.000.000 VND: in any year where the formula would push book value under salvage, that year's charge is trimmed so book value lands exactly on 50.000.000 VND. That is the loop the tool runs, so every row in the schedule is reproducible.
Front-loaded or flat: choose by purpose
- Straight-line gives a stable, easy-to-budget expense and suits assets that wear evenly — buildings, office furniture.
- Declining balance concentrates the expense (and the tax shield) in the early years — useful for technology that loses value fast, or when you want tax relief sooner. The total depreciation over the full life is identical under both methods (450.000.000 VND); only the per-year timing differs.
What the model leaves out
The tool works in whole years and does not handle partial-year (mid-month) placement in service, it does not auto-apply the Circular 45 useful-life ranges, and it ignores asset improvements or revaluations. Reconcile it with the current depreciation framework and your accounting policy before booking it.
Worked example: a 500.000.000 VND machine, 50.000.000 VND salvage, 5 years
Illustrative inputs: cost 500.000.000 VND, salvage value 50.000.000 VND, useful life 5 years, declining factor 2 (a 40%/year rate).
| Year | Straight-line dep. | Book value (SL) | Declining-balance dep. | Book value (DDB) |
|---|---|---|---|---|
| 1 | 90.000.000 | 410.000.000 | 200.000.000 | 300.000.000 |
| 2 | 90.000.000 | 320.000.000 | 120.000.000 | 180.000.000 |
| 3 | 90.000.000 | 230.000.000 | 72.000.000 | 108.000.000 |
| 4 | 90.000.000 | 140.000.000 | 43.200.000 | 64.800.000 |
| 5 | 90.000.000 | 50.000.000 | 14.800.000 | 50.000.000 |
Three things stand out.
- Straight-line is dead flat. Exactly 90.000.000 VND every year, with book value declining in a straight line until it hits 50.000.000 VND in year 5. Easy to forecast.
- Declining balance front-loads. Year 1 takes 200.000.000 VND and year 2 takes 120.000.000 VND. By the end of year 2 the declining method has recovered about 71% of the depreciable base, versus only 40% for straight-line.
- The last year is clamped to the floor. In year 5, applying the 40% rate would drop book value below 50.000.000 VND, so the charge is trimmed to land book value exactly on the salvage value. Across all five years, both methods depreciate the same 450.000.000 VND in total.
Try a factor of 1.5 (a "1.5×" declining method) or a longer life to see how the timing shifts. To connect depreciation to profit and tax, pair this with FiMo's profit-margin and break-even calculators.
Frequently asked questions
What is depreciation?
Depreciation spreads the cost of a fixed asset across the years it is used, instead of expensing it all at once. It matches the cost to the periods that benefit and creates an annual tax-deductible expense. Worked example: a machine costing 500.000.000 VND with a 50.000.000 VND salvage value over a 5-year life depreciates 90.000.000 VND per year on a straight-line basis.
How do I calculate straight-line depreciation?
Take (Cost − Salvage value) divided by the useful life to get a flat annual charge. With a cost of 500.000.000 VND, salvage of 50.000.000 VND and a 5-year life, the depreciable base is 450.000.000 VND, which divided by 5 gives 90.000.000 VND a year. That stays constant until book value equals the salvage value. It is the simplest and most predictable method.
What is the difference between straight-line and declining balance?
Declining balance multiplies the remaining book value by a fixed rate each year, so it front-loads the expense and then tapers — unlike the flat straight-line method. With a factor of 2 (a 40%/year rate), year one writes off 200.000.000 VND, more than double the straight-line 90.000.000 VND. Total depreciation over the asset's life is the same either way (450.000.000 VND); only the per-year timing differs.
What does the declining factor mean?
The factor is the multiple applied to the straight-line rate to get the declining-balance rate, which equals factor ÷ useful life. A factor of 2 (double-declining balance) gives 2 ÷ 5 = 40% per year. A factor of 1.5 produces a lower rate and slower write-off; a higher factor concentrates more expense in the early years. In Vietnam, the reducing-balance method and its rates are set out in Circular 45/2013/TT-BTC.
How does salvage value affect the calculation?
Salvage value is the estimated amount you recover at end of life. Under straight-line it is subtracted from cost up front to set the depreciable base (500.000.000 − 50.000.000 = 450.000.000 VND). Under declining balance it is not subtracted first but acts as a floor: the calculator never depreciates below 50.000.000 VND, so the final year is usually trimmed so book value lands exactly on the salvage value.
Is depreciation tax-deductible in Vietnam?
Yes. Depreciation on fixed assets used for business is deductible for corporate income tax, provided the asset, method and rates follow Circular 45/2013/TT-BTC and the useful-life framework set by the Ministry of Finance. Because declining balance front-loads the expense, it also front-loads the tax shield compared with straight-line — even though the total over the asset's life is identical. The figures here illustrate the mechanics and are not a substitute for tax advice.