The Challenges of Depreciation Schedules

Depreciation schedules can be intense.

Managing depreciation for company assets can be a cumbersome task. Planning and research are needed along with functional yet simple, uncluttered depreciation schedules so you can meet the challenge successfully. Depreciation schedules are crucial to financial planning and reporting for both ledger and tax purposes. It is important to understand the calculations of the numerous depreciation methods and fixed asset classes and how these relate to the depreciation schedules.

The Asset Class

Understand the fixed asset useful life.

Depreciation schedules may differ due to the nature of the business and the type of assets the business owns. Depreciation schedules for manufacturing companies may be more complex than those for companies that are service-related. Understanding how fixed assets are classed within the depreciation schedule is important. It is also important to understand any deviations that may exist within a particular class.

Depreciation Method

Understand how the methods are calculated.

The depreciation method may be the most difficult component of the schedule. Each method requires calculations that may become detailed and involved. A company may utilize more than one method to calculate depreciation. This may result in schedules becoming more tedious and complex, as dozens of calculations are being performed within a single report.

Helpful Suggestions

Understand the calculations being used.

Know each method being used and how depreciation is computed using that method. Avoid being overwhelmed by detail. Label columns and rows and use footnotes to explain the calculations if you are using spreadsheets. Include detailed notes if using system reports to reference these, even at a later period.

Resources

• Accounting for Fixed Assets; Raymond H. Peterson; 2002