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In order to keep good accounting records, you must track how much you depreciate each of your business assets in some form of a schedule. After all, your financial statements only include a total value for all your assets and a total accumulated depreciation amount.

Most businesses maintain depreciation schedules in a spreadsheet program that exists outside their accounting systems. Usually, one person is responsible for managing assets and their depreciation. However, in a large company, these tasks can turn into full-time jobs for several people.

The best way to keep track of depreciation is to prepare a separate schedule for each asset account that you depreciate. For example, set up depreciation schedules for Buildings, Furniture and Fixtures, Office Equipment, and so on.

Your depreciation schedule should include all the information you need to determine annual depreciation, such as the original purchase date, original cost basis, and recovery period. You can add columns to track the actual depreciation expenses and calculate the current value of each asset.

Here’s a sample depreciation schedule for vehicles:

Depreciation Schedule: Vehicles
Date Put in Service Description Cost Recovery Period Annual Depreciation
1/5/2010 Black car \$30,000 5 years \$5,000
1/1/2012 Blue truck \$25,000 5 years \$4,000

Depreciation can be more than just a mathematical exercise. Keeping track of depreciation is a good way to monitor the age of your assets and know when you should plan for their replacement. As your assets age, they’ll incur greater repair costs, so keeping depreciation schedules can help you plan repair and maintenance budgets as well.

Recording a depreciation expense calls for a rather simple entry into your accounting system. After calculating your depreciation expense, no matter which method you used to calculate that expense, here is how you would record a depreciation expense of \$4,000:

Debit Credit
Depreciation Expense \$4,000
Accumulated Depreciation: Vehicles \$4,000

The Depreciation Expense account increases by the debit, and the Accumulated Depreciation: Vehicles account increases by the credit. On the income statement, you subtract the Depreciation Expense from sales, and on the balance sheet, you subtract the Accumulated Depreciation: Vehicles from the value of Vehicles.