Accounting & Bookkeeping

glossaryTermPage.hero.prefix Asset Depreciation Schedule?

A table showing the systematic allocation of a fixed asset's cost over its useful life, detailing annual depreciation expense and book value.

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An Asset Depreciation Schedule lists every depreciable asset along with its original cost, depreciation method (straight-line, WDV, etc.), useful life, annual depreciation charge, accumulated depreciation, and net book value (NBV) for each period. Under the Companies Act 2013, Schedule II prescribes useful lives for different asset classes. The schedule is essential for financial reporting, tax computation (Section 32 of Income Tax Act), fixed asset register maintenance, and audit compliance. ERP systems automate this calculation and generate the schedule at month-end or year-end.

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Net Book Value = Original Cost − Accumulated Depreciation

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Machine purchased for ₹5,00,000, useful life 10 years, straight-line method. Annual depreciation: ₹50,000. Year 1: NBV = ₹4,50,000. Year 2: NBV = ₹4,00,000. Year 5: NBV = ₹2,50,000. Year 10: NBV = ₹0 (or salvage value).

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What depreciation methods are allowed under Indian law?

The Companies Act 2013 allows Straight-Line Method (SLM) and Written Down Value (WDV) method. The Income Tax Act prescribes WDV rates under Section 32. Businesses may use different methods for books vs tax, creating deferred tax differences.

How often should the depreciation schedule be updated?

At minimum annually, but best practice is monthly. Update whenever assets are acquired, disposed of, impaired, or when useful life estimates change. ERP systems automate monthly depreciation postings.

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Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, representing the decline in value due to wear, use, or obsolescence.

Fixed Assets

Long-term tangible assets owned by a business that are used in operations and not intended for sale, such as land, buildings, machinery, vehicles, and equipment.

Salvage Value (Residual Value)

The estimated value of an asset at the end of its useful life, representing what it could be sold for after depreciation is complete.

Straight-Line Depreciation

A depreciation method that allocates an equal amount of an asset's cost as expense in each period of its useful life.

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