Asset Depletion Calculator

Calculate the annual depletion expense for natural resources or other depletable assets using straight-line depreciation method

Input Parameters

Calculation Results

Calculation Formula

Annual Depletion = (Asset Value - Salvage Value) / Recovery Period

Where:
Asset Value = Initial cost of the depletable asset
Salvage Value = Residual value at the end of recovery period
Recovery Period = Number of years over which the asset is recovered

Asset Depletion Calculator Usage Guide

Learn how to use the Asset Depletion Calculator for natural resource extraction or other depletable assets

How to Use the Calculator

  1. Enter the initial cost of the asset (e.g., the cost of purchasing rights to extract oil or minerals).
  2. Enter the recovery period in years (e.g., the number of years over which you expect to extract the resource).
  3. Enter the salvage value (if any) - the residual value of the asset after the recovery period.
  4. Click the "Calculate" button to compute the annual depletion expense.

Example

Suppose you purchase oil rights for $5,000,000 with an expected recovery period of 10 years and a salvage value of $500,000. The annual depletion expense would be:

$ (5,000,000 - 500,000) / 10 = $450,000 per year

Working Principle

The calculator uses the straight-line depreciation method to calculate the annual depletion expense. This method evenly distributes the cost of the asset (minus its salvage value) over its useful recovery period.

Applications

This calculator is particularly useful for:

  • Oil and gas companies
  • Mineral extraction businesses
  • Other industries where resources are depleted over time