Depreciation Model

Forecast the asset base before the charge

Start with opening net book value, remaining useful life and additions from the Capex Model. Existing assets and new additions have different starting points. Dividing each year’s declining NBV by the original life is not straight-line depreciation.

This page connects expense to an integrated asset plan. The Depreciation & Amortization Calculator instead calculates schedules from supplied assumptions. The D&A reference documents methods and source relationships.

Separate opening assets from new vintages

Opening EUR 300,000 PP&E with three remaining years gives EUR 100,000 annual depreciation. The EUR 100,000 addition in 2026 has five years of life and a half-year first charge, adding EUR 10,000. Total depreciation is EUR 110,000.

For 2027, opening assets still contribute EUR 100,000, the 2026 addition contributes a full EUR 20,000, and new EUR 150,000 capex contributes EUR 15,000 with half-year timing. Total depreciation is EUR 135,000. New investment does not restart earlier vintages’ clocks.

Make life and first-year timing explicit

Full-year and half-year conventions give different first charges; an exact commissioning date uses supported day-weighted exposure. Compare their effect on EBIT and closing PP&E. A planning convention does not establish statutory or tax treatment.

The detailed asset schedule uses zero residual value and caps depreciation at available carrying value. Enter remaining life for opening assets rather than inventing an original purchase date. The forecast can end before full depreciation; remaining NBV at a short horizon is not automatically an error.

Choose one source for each charge

An asset schedule can derive depreciation automatically. A detailed D&A source can supply a direct amount, a percentage of an eligible opening asset reference, or asset-linked straight-line depreciation. Identify ownership before adding a separate expense.

An opening-balance percentage is a top-down method. EUR 100,000 NBV at 20% gives EUR 20,000 initially, then EUR 16,000 on remaining EUR 80,000 without other movements. Use the asset-plan reference and depreciation ownership reference to avoid duplicating automatic and manual charges.

Reconcile PP&E and profit together

Closing PP&E = opening PP&E + additions − depreciation − carrying-value disposals. The preview closes at EUR 290,000 in 2026 and EUR 305,000 in 2027. EUR 400,000 annual EBITDA less EUR 110,000 or EUR 135,000 D&A produces EUR 290,000 or EUR 265,000 EBIT.

Changing life changes expense timing and book value, not the original purchase payment. Keep tangible PP&E separate from intangible positions. The simplified schedule equates disposal proceeds to carrying value; gains, losses and impairment need their own treatment.

Add back D&A without creating cash

The indirect cash-flow statement adds D&A back to net income: EUR 110,000 in 2026 and EUR 135,000 in 2027 here. This removes a non-cash expense from profit; it neither reverses the investing payment nor creates a new receipt.

Depreciation can affect modeled tax through taxable earnings. That cash effect depends on tax assumptions and is separate from the add-back. Consult the cash-flow presentation reference and cash reconciliation reference when profit and cash diverge.

Review investment and funding in the same case

Check each vintage’s additions, life, timing and closing value before aggregate EBIT. The capex statement-effect guide isolates a purchase; the Assets & Financing Model develops the combined chain. The Debt Model supplies financing interest separately from depreciation. Open the model above to enter your assumptions; the preview does not import its values into saved work.