# Depreciation A 12-month fixed-asset register: eight asset categories with opening gross / accumulated, useful life, salvage value, and monthly capex; per-category straight-line depreciation with half-month convention; panel-level monthly opening / additions / closing / NBV roll; and a dashboard with annual depreciation, annual capex, depreciation intensity, capex intensity, and peak monthly depreciation status. - Canonical: https://finamodel.com/templates/depreciation - Excel download: https://finamodel.com/templates/depreciation.xlsx - Category: Corporate Finance - Model type: Operating model - Difficulty: Intermediate - Audiences: CFOs & FP&A, Founders & operators, CFOs, FP&A teams, Controllers, Tax accountants - Tags: depreciation, fixed assets, capex schedule, asset register, straight-line ## Overview 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's included - 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 - Status thresholds for depreciation intensity and capex intensity (green / amber) - Eight asset categories with opening gross / accumulated, useful life (months), and salvage percentage - Asset Master with opening NBV, useful life, salvage, monthly depreciation rate, annual capex, and life weight - Asset Register: panel monthly opening gross / additions / closing gross / opening accum / depreciation / closing accum / NBV - Depreciation coverage row (depreciation / opening NBV) - Dashboard with annual depreciation, annual capex, closing NBV / gross / accum, depreciation and capex intensity, peak monthly depreciation, and net capex - Per-category composition block: opening NBV, annual capex, 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. ## Built for fixed-asset close packs When the question is "how much depreciation lands this month, and what does the closing NBV look like after capex?", a clean fixed-asset roll-forward is the cleanest answer. This template gives controllers an audit-ready FA roll that ties to the IS depreciation line and the BS PP&E balance every month. ## Designed for one-edit responsiveness Every input - opening balance, useful life, salvage, monthly capex, threshold - is a named-range or per-category input cell. Flex one number and the per-category depreciation, panel asset register, and dashboard status all recompute - no formula rewrites. ## Honest about timing The half-month convention on additions removes the timing artefact that makes mid-month vs end-of-month capex purchases produce wildly different first-period depreciation. Assets bought in month t get half a month of depreciation in month t and a full month thereafter, regardless of which day the asset arrives. ## Built for fixed-asset close packs When the question is "how much depreciation lands this month, and what does the closing NBV look like after capex?", a clean fixed-asset roll-forward is the cleanest answer. This template gives controllers an audit-ready FA roll that ties to the IS depreciation line and the BS PP&E balance every month. ## Designed for one-edit responsiveness Every input - opening balance, useful life, salvage, monthly capex, threshold - is a named-range or per-category input cell. Flex one number and the per-category depreciation, panel asset register, and dashboard status all recompute - no formula rewrites. ## Honest about timing The half-month convention on additions removes the timing artefact that makes mid-month vs end-of-month capex purchases produce wildly different first-period depreciation. Assets bought in month t get half a month of depreciation in month t and a full month thereafter, regardless of which day the asset arrives. ## Workbook structure ### Cover Workbook overview, sheet legend, and tab-colour key for navigation. - Title and scope framing - Sheet-by-sheet purpose summary - Tab-colour legend ### Assumptions Every driver in one sheet: category panel, capex plan, and dashboard thresholds. - Eight asset categories with opening gross / accumulated, useful life, salvage - 12-month capex plan per category - Depreciation-intensity and capex-intensity thresholds (green / amber) ### Asset Master Per-category opening NBV, depreciation rate, annual capex, and life weight. - Opening NBV = opening gross - opening accumulated - Monthly depreciation rate = (1 - salvage) / useful life months - Annual capex sums the 12-month plan per category - Life weight = opening NBV times useful life (for weighted-life context) - Panel-total row for opening NBV, annual capex, life weight, and opening gross ### Capex Schedule Per-category monthly capex with category and panel totals. - One row per category, 12 month columns - Annual total column on the right - Panel total row at the bottom ### Depreciation Schedule Per-category monthly depreciation expense with half-month on additions. - Straight-line method: monthly_rate * (opening gross + cumulative capex - 0.5 * current capex) - OFFSET / COLUMN() pattern for the cumulative term avoids same-row dependencies - Annual total column on the right - Panel total row at the bottom ### Asset Register Panel-level monthly fixed-asset roll-forward. - Opening gross rolls from prior month closing; first month from Panel_Op_Gross - Additions pull from Capex Schedule panel total via named ranges - Closing gross = opening + additions identity - Opening accumulated rolls from prior month closing; first month from SUM(Op_Accum) - Depreciation pulls from Depreciation Schedule panel total via named ranges - Closing NBV = closing gross - closing accumulated - Depreciation coverage = depreciation / opening NBV (with zero guard) ### Dashboard Headline metrics with traffic-light status and per-category composition. - Annual depreciation, annual capex, closing NBV / gross / accumulated at M12 - Depreciation intensity (annual D / opening gross) with On track / Watch / Heavy status - Capex intensity (annual capex / opening NBV) with On track / Watch / Heavy status - Peak monthly depreciation and the month it occurs - Net capex (capex - depreciation) for IS / CF wiring intuition - Per-category composition: opening NBV, annual capex, annual depreciation ### Cover Workbook overview, sheet legend, and tab-colour key for navigation. - Title and scope framing - Sheet-by-sheet purpose summary - Tab-colour legend ### Assumptions Every driver in one sheet: category panel, capex plan, and dashboard thresholds. - Eight asset categories with opening gross / accumulated, useful life, salvage - 12-month capex plan per category - Depreciation-intensity and capex-intensity thresholds (green / amber) ### Asset Master Per-category opening NBV, depreciation rate, annual capex, and life weight. - Opening NBV = opening gross - opening accumulated - Monthly depreciation rate = (1 - salvage) / useful life months - Annual capex sums the 12-month plan per category - Life weight = opening NBV times useful life (for weighted-life context) - Panel-total row for opening NBV, annual capex, life weight, and opening gross ### Capex Schedule Per-category monthly capex with category and panel totals. - One row per category, 12 month columns - Annual total column on the right - Panel total row at the bottom ### Depreciation Schedule Per-category monthly depreciation expense with half-month on additions. - Straight-line method: monthly_rate * (opening gross + cumulative capex - 0.5 * current capex) - OFFSET / COLUMN() pattern for the cumulative term avoids same-row dependencies - Annual total column on the right - Panel total row at the bottom ### Asset Register Panel-level monthly fixed-asset roll-forward. - Opening gross rolls from prior month closing; first month from Panel_Op_Gross - Additions pull from Capex Schedule panel total via named ranges - Closing gross = opening + additions identity - Opening accumulated rolls from prior month closing; first month from SUM(Op_Accum) - Depreciation pulls from Depreciation Schedule panel total via named ranges - Closing NBV = closing gross - closing accumulated - Depreciation coverage = depreciation / opening NBV (with zero guard) ### Dashboard Headline metrics with traffic-light status and per-category composition. - Annual depreciation, annual capex, closing NBV / gross / accumulated at M12 - Depreciation intensity (annual D / opening gross) with On track / Watch / Heavy status - Capex intensity (annual capex / opening NBV) with On track / Watch / Heavy status - Peak monthly depreciation and the month it occurs - Net capex (capex - depreciation) for IS / CF wiring intuition - Per-category composition: opening NBV, annual capex, annual depreciation ## Features - **Half-month convention on additions:** Capex in month t depreciates for half a month in t and a full month thereafter. The per-category depreciation formula uses an OFFSET / COLUMN() pattern so the cumulative gross-base term doesn't trip same-row dependencies. - **Identity-clean panel roll:** Closing gross = opening gross + additions; closing accumulated = opening accum + depreciation; closing NBV = closing gross - closing accumulated. Every panel row is an explicit identity at every month. - **Two intensity ratios on one dashboard:** Depreciation intensity (annual D / opening gross) flags whether the panel is short-life-heavy. Capex intensity (annual capex / opening NBV) flags whether the year is steady-state, growth, or under-investment. ## Use cases - **Close-pack fixed-asset rollforward:** Controllers flex any input - opening balance, useful life, salvage, monthly capex - and the per-category depreciation, panel asset register, and dashboard recompute. Useful for the FA roll that closes alongside IS / BS at month-end. - **Capex planning and policy:** Toggle the capex plan to test the depreciation expense path next year and the pull-through to NBV. The capex-intensity dashboard line shows whether the plan is replacement-only or growth-oriented at a glance. - **3-statement integration prep:** The depreciation expense row feeds the IS depreciation line; the capex row feeds the CF investing leg; the NBV row feeds the BS PP&E line. Wire the Asset Register panel into the existing 3-statement template via direct cross-sheet refs. ## Frequently asked questions ### 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. ## Related templates - [3 Statement Model](https://finamodel.com/templates/3-statement-model) - [Working Capital Model](https://finamodel.com/templates/working-capital-model) - [Real Estate Development Pro Forma Model](https://finamodel.com/templates/real-estate-model)