Compute Depreciation Scenario
Compare the accounting cost of the same investment over two useful lives.
Change the assumptions
An illustrative $100 million investment with no residual value, compared over three and six years. These are scenario inputs, not estimates for a particular company.
Annual depreciation: $33.33 million (A), $16.67 million (B).
| Year | Life A | Life B |
|---|---|---|
| 0 | 100.00 | 100.00 |
| 1 | 66.67 | 83.33 |
| 2 | 33.33 | 66.67 |
| 3 | 0.00 | 50.00 |
| 4 | 0.00 | 33.33 |
| 5 | 0.00 | 16.67 |
| 6 | 0.00 | 0.00 |
Method and limits
Annual depreciation = (cost − residual value) ÷ useful life. Depreciation begins immediately and uses full years. Carrying value stops declining at the residual value; the table includes year zero.
A longer life spreads the same depreciable cost over more years. It changes the timing of expense, not the original cash purchase. This simplified model excludes taxes, impairment, financing, additions, and partial-year conventions. Accounting life is not a prediction of technical obsolescence.