Glossary

Depreciation schedule

A depreciation schedule spreads the cost of a fixed asset across its useful life in your accounts — matching the cost to the years the asset actually earns its keep.

2 min read

Spreads asset costOver useful life

Matching in actionNot a cash cost

Definition

A depreciation schedule sets out how much of a fixed asset’s cost is charged to the P&L each period — commonly straight-line or reducing balance — until the asset reaches its residual value.

In plain terms

A £30,000 van used for five years costs roughly £6,000 a year in the accounts, not £30,000 in year one. Depreciation is an accounting entry, not a cash payment.

Why it matters for your company

Depreciation lowers reported profit without touching cash, which is why lenders add it back to reach EBITDA. It is the accounting cousin of capital allowances.