Depreciation Schedule
AdvancedA depreciation schedule is a table in a financial model or accounting record that shows how the cost of each fixed asset, or group of assets, is spread over its useful life, period by period.
When a company buys equipment, buildings or vehicles, the cost is not expensed immediately. Instead, it is depreciated over the asset's useful life. A depreciation schedule tracks the asset's cost, depreciation charge for each period, accumulated depreciation and remaining book value.
In financial models, the depreciation schedule links capital expenditure to future depreciation expense. New investment in each year adds to depreciation in future years.
For example, if a company spends 500,000 on equipment with a five-year life and no residual value, using straight-line depreciation, the schedule shows 100,000 of depreciation each year for five years. If it buys more equipment the next year, a new layer of depreciation is added.
Depreciation schedules feed into the income statement, balance sheet and cash flow statement. Separate schedules may be kept for tax purposes, since tax rules often allow faster depreciation, which creates deferred tax.
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