Depreciation

This records the overall depreciation charge for the period — the estimated fall in value of fixed assets, spread across their useful life. As an expense it normally carries a debit balance, matched by a credit to the relevant accumulated depreciation account in Fixed Assets.

Real-world examples

Small professional services firm, using one depreciation account

A small consultancy with a modest asset base — a few laptops, some office furniture — doesn't bother splitting depreciation across the specific codes (8001–8004). At the year end, its accountant calculates £1,200 of total depreciation across all fixed assets and posts it as one figure: a debit of £1,200 to 8000 (Depreciation) and a matching credit of £1,200 spread across the relevant accumulated depreciation accounts in Fixed Assets in proportion to what each asset class represents.

Larger business using the specific codes instead

A manufacturer or logistics business with distinct categories of plant, vehicles and office equipment normally posts depreciation directly to the relevant specific code (8001, 8002, 8003 or 8004) for each asset class, so management accounts show the split by category. For a business set up this way, 8000 typically sits at zero — it exists in the chart of accounts but simply isn't used once the more granular codes are adopted.

Commonly confused with

Because code 8001 (Plant/Machinery Depreciation) sits right next to this one in Overheads & Depreciation, it's a common mis-posting target. Code 8000 is specifically for depreciation, while 8001 covers plant/machinery depreciation — similar in nature, but keeping them separate is what makes the overheads & depreciation section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Depreciation won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads & Depreciation