Equipment Depreciation (Farm) Calculator
Annual depreciation from price and annual hours.
About this calculator
This calculator projects farm equipment value using the ASAE EP496 declining-balance approach, where value shrinks by a fixed percentage each year rather than a fixed dollar amount — the same way a vehicle loses more absolute value in year one than year ten. It applies a depreciation rate keyed to equipment type: 8% per year for tractors, 11.5% for combines (which depreciate faster due to harder duty cycles and shorter useful-life expectations), and 10% for implements and other equipment. Current value is purchase price times (1 − rate) raised to the equipment's current age in years; projected future value repeats that math out to age-plus-projection-period, but is floored at your chosen salvage percentage of the original price so the curve doesn't decay toward zero indefinitely — real machinery retains scrap and parts value even decades in.
Total depreciation over the projection window, divided evenly across the years, gives an average annual figure, and dividing that by your expected annual hours produces a depreciation cost per operating hour useful for custom-rate or lease-rate calculations. Keep in mind this is a smooth theoretical curve: it doesn't account for major overhauls that can bump resale value, regional market swings, or the fact that real declining-balance rates observed in the used-equipment market vary by brand, model, and condition — use it for budgeting and comparison, not as an appraisal.
Inputs
Results
Current market value ($)
$150,000.00
≈ 10 used cars
Figures current as of 2020. Source: ASAE EP496.3 FEB2006 (R2020), Agricultural Machinery Management
How to Use This Calculator
- Enter Purchase Price and Current Age (years) of the equipment.
- Select Equipment Type: Tractor (8%/yr), Combine (11.5%/yr), or Implement (10%/yr) — these are ASAE declining-balance rates.
- Set Projection Period (years) to see future value, and Annual Usage (hours) for a per-hour depreciation cost.
- Adjust Salvage Floor (%) if you plan to sell before the equipment reaches zero value.
- Review Current Value, Future Value, Total Depreciation, Avg Annual Depreciation, and Depreciation Cost/Hour for budgeting.
How the result changes with Purchase price ($)
| Purchase price ($) | Current market value ($) |
|---|---|
| 75,000 | $75,000.00 |
| 112,500 | $112,500.00 |
| 225,000 | $225,000.00 |
| 375,000 | $375,000.00 |
What each input means
- Purchase price ($)
- Original purchase price or current list price of the equipment.
- Current age (years)
- Current age of the equipment in years. Enter 0 for new equipment.
- Projection period (years)
- Number of years to project depreciation forward.
- Equipment type (1-3)
- 1 = Tractor (8%/yr), 2 = Combine (11.5%/yr), 3 = Implement (10%/yr). ASAE declining-balance rates.
- Annual usage (hours)
- Expected annual usage hours for per-hour depreciation cost.
- Salvage floor (%)
- Minimum residual value as percentage of purchase price.
What each result means
- Current market value ($)
- Estimated current market value using ASAE declining-balance method.
- Future value ($)
- Projected value at end of projection period.
- Total depreciation ($)
- Total value lost over the projection period.
- Avg. annual depreciation ($)
- Average depreciation expense per year.
- Depreciation cost/hour ($)
- Depreciation cost allocated per operating hour.
- % of purchase price remaining
- Current value as percentage of original purchase price.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersPurchase price ($) = 150000, Current age (years) = 0, Projection period (years) = 10, Equipment type (1-3) = 1 = 6 input(s) provided
- Calculate Current market valueCurrent market value = purchasePrice * pow(1 - depRate, currentAge)150000 = $150,000
- Calculate Future valueFuture value = max(salvageFloor, rawFutureValue)65158 = $65,158
- Calculate Total depreciationTotal depreciation84842 = $84,842
Figures and sources
- Remaining-value declining-balance depreciation method (2020) — ASAE EP496.3 FEB2006 (R2020), Agricultural Machinery Management
Engine last updated . Checked against 1 independently-derived test — how we verify calculators. Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
Why do combines depreciate faster than tractors in this calculator?
The calculator applies a fixed annual declining-balance rate by equipment type: 8% for tractors, 11.5% for combines, and 10% for implements and other equipment. Combines get the steepest rate because harder duty cycles and shorter useful-life expectations mean they lose value faster in the used-equipment market than a comparably priced tractor.
Why doesn't the projected value ever reach zero, even over a 30-year projection?
Future value is floored at your chosen salvage percentage of the original purchase price — the calculation takes the greater of the salvage floor and the raw declining-balance result. This reflects that real machinery retains scrap and parts value even decades in, so the value curve flattens out near the floor instead of decaying indefinitely toward zero.
Is the declining-balance method here the same as what my accountant uses for tax depreciation (like MACRS)?
No — this uses the ASAE EP496.3 remaining-value method (Agricultural Machinery Management), which models real market resale value shrinking by a fixed percentage each year (value × (1 − rate)^age). Tax depreciation schedules like MACRS follow IRS-defined recovery periods and percentages for expensing purposes, which is a separate calculation from what this tool estimates.
Why does depreciation cost per hour change if I only adjust my annual usage hours?
Depreciation cost per hour is the average annual depreciation dollar amount divided by your expected annual hours, and annual depreciation itself doesn't depend on hours in this model — it comes purely from purchase price, age, and the equipment-type rate. So entering fewer annual hours spreads the same total depreciation over less usage and raises the per-hour figure, while more hours lowers it, independent of any real difference in wear.
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