{"id":14189,"date":"2023-08-31T14:07:44","date_gmt":"2023-08-31T20:07:44","guid":{"rendered":"https:\/\/limblecmms.com\/?page_id=14189"},"modified":"2025-03-24T13:53:51","modified_gmt":"2025-03-24T19:53:51","slug":"equipment-depreciation","status":"publish","type":"page","link":"https:\/\/limblecmms.com\/learn\/definitions\/equipment-depreciation\/","title":{"rendered":"Equipment Depreciation"},"content":{"rendered":"

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Equipment Depreciation<\/h1>

Everything you ever needed to know about equipment depreciation.<\/h2><\/header>Free CMMS Buyer's Guide<\/span><\/a>\n
\n \n <\/span>Last updated on March 24, 2025<\/span>\n <\/span>\n bBrinton<\/span>\n <\/span>\n <\/div>\n\n [\/vc_column][vc_column width=”1\/2″][vc_video link=”https:\/\/www.youtube.com\/watch?v=Z_ODPgHrE6I” align=”right” css=”” el_class=”video-shadow”][\/vc_column][\/vc_row][vc_row kd_background_image_position=”vc_row-bg-position-top” css=”.vc_custom_1687442797424{margin-top: 40px !important;}” el_class=”limble-page-blog-width”][vc_column][vc_column_text]<\/p>\n

What is equipment depreciation?<\/h2>\n

Equipment depreciation<\/b> (ED) tells you how much value a certain asset is losing over a year owing to its regular use.<\/span><\/p>\n

Most of the physical assets you own are worth less now than when they were bought. Even the best-maintained equipment will eventually need to be replaced. Equipment depreciation is one of the factors that help you determine whether it\u2019s more cost-effective to replace an asset or continue repairing it.<\/span><\/p>\n

Say an asset costs you $11,000. Its useful life is estimated at five years. At the beginning of the 4th year, after using straight-line depreciation (we\u2019ll explain it later), the asset is now worth $5,000. It experiences a major breakdown and you need to shell out $5k to repair it. Is that worth it?<\/span><\/i>\u00a0<\/span><\/p>\n

ED is helpful here because it provides you with the current value of your assets<\/b>. When older assets break down, an allocation of funds for new ones might be a wiser move than spending money on repairs, especially if it\u2019s more money than the asset itself is worth at that time.\u00a0<\/span><\/p>\n

All of that being said, the main purpose of depreciation lies in the field of taxes. You are typically eligible to write off (or \u201cdepreciate\u201d) part of the cost of assets over a period of time. Among other things, this means saving money on <\/span>maintenance expenses<\/span><\/a> at the end of the financial year. <\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row kd_background_image_position=”vc_row-bg-position-top” css=”.vc_custom_1687442797424{margin-top: 40px !important;}” el_class=”limble-page-blog-width”][vc_column][vc_column_text]<\/p>\n

Table of Contents<\/span><\/h2>\n

Which assets can be depreciated?<\/span><\/a>
\nFactors determining equipment depreciation<\/a>
\nWhat is an equipment depreciation schedule?<\/a>
\nCommon equipment depreciation methods<\/a>
\nThe intersection between depreciation and asset management<\/a>
\nStay one step ahead with CMMS software<\/a>[\/vc_column_text][\/vc_column][\/vc_row][vc_row kd_background_image_position=”vc_row-bg-position-top” css=”.vc_custom_1687440273251{margin-top: 40px !important;}” el_class=”limble-page-blog-width”][vc_column][vc_column_text]<\/p>\n

Which assets can be depreciated?<\/h2>\n

Not every asset you own can be depreciated. Certain low-cost items (typically, with short lifespans) can be recorded as business expenses and are written off the same year as they were incurred. So which assets <\/span>can be<\/span><\/i> depreciated?\u00a0<\/span><\/p>\n

The IRS rules dictate which of your assets are depreciable. According to the <\/span>IRS Publication 946<\/span><\/a>, in order to qualify as a depreciable asset for tax purposes, the property must meet the following requirements:<\/span><\/p>\n