Depreciation
Corporate Finance Financial Model (Free Excel Download)
Schedule fixed-asset additions, useful lives, and depreciation methods to forecast book expense, net PP&E, and the cash-tax implications of capital investment.
professionals from Deloitte
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About this model
A depreciation model is a fixed-asset register that translates per-category opening balances, useful lives, salvage values, and monthly capex into a panel-level roll-forward of gross book value, accumulated depreciation, and net book value. This template lays the full mechanic on seven sheets: an Assumptions sheet with eight asset categories (buildings, leasehold improvements, plant and machinery, IT equipment, office equipment, vehicles, software, furniture), each with opening gross book value, opening accumulated depreciation, useful life in months, salvage percentage, and a 12-month capex plan, plus dashboard thresholds for depreciation and capex intensity; an Asset Master sheet that computes per-category opening NBV, the Monthly_Rate as (1 - salvage) / useful_life_months, annual capex, and a life weight (opening NBV times useful life), with a panel-total row for opening NBV, annual capex, life weight, and opening gross; a Capex Schedule sheet that mirrors the Assumptions capex plan with category and panel totals; a Depreciation Schedule sheet with per-category monthly depreciation expense (straight-line, half-month convention on additions) and a panel-total row; an Asset Register sheet that rolls the panel monthly through opening gross / additions / closing gross / opening accumulated / depreciation expense / closing accumulated / NBV / depreciation coverage; and a Dashboard sheet with annual depreciation, annual capex, closing NBV / gross / accumulated at M12, depreciation intensity (annual D / opening gross), capex intensity (annual capex / opening NBV), peak monthly depreciation and the month it occurs, net capex (capex - depreciation), and a per-category composition block with opening NBV, annual capex, and annual depreciation per category.
The per-category depreciation formula uses a half-month convention so assets purchased in month t depreciate for half a month in month t and a full month thereafter. The cumulative gross-base term is computed via an OFFSET / COLUMN() pattern that avoids same-row prior-column dependencies, so the formula reads cleanly without circular-reference traps. The Monthly_Rate per category is (1 - salvage) / useful_life_months, so swapping methods (declining balance, units of production) is a one-cell change per category. Salvage value caps depreciation indirectly: with the chosen 12-month horizon and the default useful lives in the template (buildings 360 months, IT equipment 36 months, vehicles 72 months, etc.), no category fully depreciates within the year.
CFOs, FP&A teams, controllers, and tax accountants use this template for month-end fixed-asset roll-forwards (the FA roll that closes alongside IS / BS), capex planning (test next year's depreciation expense path against a proposed capex plan), and 3-statement integration prep (the depreciation row feeds IS, the capex row feeds CF investing, the NBV row feeds BS PP&E). The template focuses on the gross / accumulated / NBV path; cash impact of capex is shown in dollar terms but the cash-leg integration belongs in the cashflow or 3-statement template. Asset disposals are out of scope - the panel assumes a going-concern register with no disposals during the 12-month horizon.
What every model includes
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
What's inside the Depreciation
- Eight asset categories: buildings, leasehold improvements, plant and machinery, IT equipment, office equipment, vehicles, software, furniture
- Per-category opening gross book value, opening accumulated depreciation, useful life (months), and salvage percentage
- Per-category 12-month capex plan with category and panel totals
- Asset Master with opening NBV, monthly depreciation rate, annual capex, life weight, and opening gross
- Per-category Depreciation Schedule with straight-line method and half-month convention on additions
- Asset Register: panel monthly opening / additions / closing gross, opening / depreciation / closing accumulated, NBV, and depreciation coverage
- Dashboard with annual depreciation, annual capex, closing NBV / gross / accumulated, depreciation intensity, capex intensity, peak monthly depreciation, and net capex
- Per-category composition block with opening NBV, annual capex, and annual depreciation
Depreciation Model: A 60-Month Fixed Asset Register with Book and Tax Registers
This depreciation model provides a 60-month (5-year) fixed-asset register for a single operating entity. It supports a systematic audit trail by tracking per-category asset data, computing both book and tax depreciation, and feeding parent financial models.
The template is designed for finance professionals who need to understand the drivers and outputs of a depreciation calculation.
Operating Drivers and Inputs
The model's calculations are driven by key inputs documented in the Assumptions sheet. These include per-category opening balances, useful lives, salvage percentages, and monthly capital expenditure (capex) projections over a 60-month horizon.
- A scenario toggle allows switching between Base, High_Capex, and Low_Capex cases, adjusting capex levels accordingly. The model also incorporates tax-specific drivers such as bonus depreciation percentages and Section 179 expensing amounts, which are applied at the category level.
- Default settings cover eight asset categories, including Buildings, Leasehold improvements, and IT equipment, each with predefined lives and methods. Users can edit these inputs to reflect their specific asset portfolio.
Calculation Flow and Depreciation Methods
Depreciation is computed separately for book and tax purposes. Book depreciation uses the straight-line method, applying a half-month convention to new additions.
- It enforces a salvage cap to ensure accumulated depreciation does not reduce net book value below the salvage floor. Tax depreciation employs a method dispatch that supports straight-line, double-declining balance (DDB), DDB with switch to straight-line, sum-of-years' digits (SYD), and MACRS factors.
- Bonus depreciation and Section 179 expensing are integrated into the tax calculation, following the IRS-ordered basis reduction. The annual tax depreciation is then spread evenly across the months of each year, with vintages tracked for audit purposes.
Outputs and Reporting
The model produces a range of outputs for reporting and analysis. The Asset Register provides a monthly roll-forward of gross assets, accumulated depreciation, and net book value (NBV), along with details on disposals and gains or losses.
- The Tax Provision calculates the deferred tax liability (DTL) by comparing book and tax depreciation, showing the timing differences that build and reverse over the 5-year horizon. A Dashboard consolidates key performance indicators such as annual depreciation, capex, depreciation intensity, and capex intensity, with traffic-light statuses calibrated to demonstrate mixed results.
- Additionally, a feed pack with named ranges exports data to parent financial models, and a Checks sheet validates the model's integrity through 12 reconciliation tests.
Practical Use and Considerations
This model is suited for finance teams needing a detailed fixed-asset register that supports both book and tax accounting. It facilitates audit trails through vintage tracking and provides sensitivity analysis to explore how changes in asset life or salvage value affect depreciation and NBV.
- Users should be aware of its scope: it does not enforce Section 179 limits, ignores mid-quarter convention, and does not model impairments or working capital effects. The DTL sign convention follows a specific pattern that can be flipped if preferred.
- The public download is a values-only preview, so live formulas and automatic recalculation are not included; it serves as a reference for understanding the underlying calculations and relationships.
Formatted to IB standards
Named theme colors repaint the whole workbook in one click, on top of an investment-banking structure with clear input, output, and cross-sheet reference styling - brand-ready, institutional-grade, and fully auditable.
Created by ex-finance professionals
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Frequently asked
What is a depreciation model?+
A depreciation model is a fixed-asset register that tracks gross book value, accumulated depreciation, and net book value for a panel of asset categories over time. It translates capex into a depreciation expense path (straight-line in this template) and rolls the panel forward month by month.
How does the half-month convention work?+
Assets purchased in month t depreciate for half a month in month t (so half of one month's straight-line expense) and for a full month in every subsequent month. The model implements this by computing the depreciable base as opening gross plus all prior cumulative capex plus half of the current month's capex.
Why straight-line and not declining-balance?+
Straight-line is the most common method for book purposes and is what most operating businesses use for IS reporting. The Asset Master sheet computes a single Monthly_Rate per category as (1 - salvage) / useful_life_months, so swapping to a declining-balance method is a one-cell change per category if needed.
What about asset disposals?+
Disposals are out of scope for this 12-month panel template. Real fixed-asset registers track disposals separately (gain/loss on sale, retirement of accumulated depreciation when an asset leaves). For a steady-state operating panel with no disposals during the horizon, the gross / accumulated / NBV identities hold cleanly without disposal accounting.
Can I add more asset categories?+
Yes. Extend the eight-row category block on Assumptions, add the corresponding row on Asset Master with the same formulas, the corresponding row on Capex Schedule, and the corresponding row on Depreciation Schedule. The panel-total rows and dashboard pick up the new rows automatically via the SUM ranges.
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