Construction Financial Glossary

Depreciation Schedule Definition

A depreciation schedule outlines how the value of construction assets—such as machinery, tools, and vehicles—declines over time. It helps companies spread the cost of long-term assets across multiple accounting periods to reflect their usage and wear.

How a Depreciation Schedule Benefits Construction Companies

By systematically accounting for asset depreciation, companies can accurately report financial performance, optimize tax deductions, and plan for future equipment replacements.

Common Depreciation Methods

    1. Straight-line depreciation, where assets lose value evenly over their useful life
    2. Declining balance depreciation, which applies a higher expense in early years
    3. Units of production depreciation, which ties depreciation to actual usage levels


Related Terms: Capital Expenditures, Fixed Assets, Equipment Lifecycle Costing, Financial Reporting

FAQs

How is depreciation different from maintenance costs?

A: Depreciation accounts for an asset’s loss in value over time, while maintenance costs cover repairs and upkeep.

Can depreciation affect project costing?

A: Yes, depreciation expenses are often allocated to project budgets when equipment is used.

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