How to Calculate Partial Year Depreciation

When an asset is put in service in any month other than January (or first month of a fiscal year), a business generally takes depreciation only for the months the asset was owned. To calculate the amount of depreciation, take the calculated amount for the year, divide it by 12 to get the monthly expense, and multiply that number by the number of months the asset was owned.

For example, if a business purchases an Ford F350 truck on August 1, under Straight Line depreciation, we would take the depreciation expense for the first year $7,600, divide by 12 to get the monthly cost of $733. Then multiply that by the number of months the asset was owned–5. The first year’s depreciation would be $733 x 5 = $3665.

Asset 120xx Ford F350
Asset NameVehicles
Useful Life5 years
Cost (Basis)$40,000
Salvage Value$2,000
Units: Miles100,000
Chart showing details for sample asset.

The depreciation expense to complete the five year period would be calculated as 7 months in the sixth year of the asset’s life. Five months in the first year, 12 months in years two through five, and seven months in year six.

Depreciation Year 15 months
Depreciation Year 212 months
Depreciation Year 312 months
Depreciation Year 412 months
Depreciation Year 512 months
Depreciation Year 67 months
Chart showing depreciation breakdown for partial year.

What is the Journal Entry to Record Depreciation?

Whether a company records its depreciation monthly or yearly, an adjusting journal entry is made to adjust the balance of depreciation expense and to record the the loss of value of the asset in the accumulated depreciation account.

The journal entry is a debit to Depreciation Expense and a credit to the contra asset Accumulated Depreciation. In this case, we’ll assume the asset has $2,000 a year in depreciation (straight-line)

Depreciation Expense2,000
Accumulated Depreciation2,000
Journal Entry to record Depreciation Expense

When the entry is posted to the accounts, Depreciation Expense has increased and Accumulated Depreciation has increased. The new Accumulated Depreciation total then moves to the Balance Sheet where it shows the total reduction in the assets value from the time the asset was purchase. The Depreciation Expense is accumulating, adding up over time.

Less Accumulated Depreciation(2.000)
Net Book Value$ 8,000
Table showing Fixed Asset portion of a Balance Sheet

Assuming that the asset in question has a 5 year useful life and the company uses Straight Line Depreciation, the next year’s entry will be:

Depreciation Expense2,000
Accumulated Depreciation2,000
Journal Entry to record Depreciation Expense

The new Accumulated Depreciation amount will be $2,000 + $2,000 = $4,000. The Balance Sheet will now show this:

Less Accumulated Depreciation(4.000)
Net Book Value$ 6,000
Table showing Fixed Asset portion of a Balance Sheet

The Depreciation has Accumulated to $4,000. The Net Book Value of the asset is now $6,000. Notice we haven’t touched the original (historic) cost of the asset. We are tracking the loss in value using the Accumulated Depreciation contra asset account.

For more how-to tips about calculating depreciation, check out these articles:

Caroline Grimm

Caroline Grimm is an accounting educator and a small business enthusiast. She holds Masters and Bachelor degrees in Business Administration. She is the author of 13 books and the creator of Accounting How To YouTube channel and blog. For more information visit:

Recent Posts