Plant/Machinery Depreciation
Overheads & DepreciationThis records the annual depreciation charge specifically for Plant and Machinery, recognised as an expense in the profit and loss account. It normally carries a debit balance, matched by a credit to the accumulated depreciation account (code 0021).
Real-world examples
Manufacturing
A manufacturer's CNC machining centre cost £180,000 and is depreciated straight-line over 12 years, giving an annual charge of £15,000. The entry is a debit of £15,000 to 8001 (Plant/Machinery Depreciation) and a credit of £15,000 to 0021 (accumulated depreciation, Plant and Machinery). Because plant is usually the largest asset category on a manufacturer's balance sheet, this is often one of the biggest single lines in its overheads.
Food and drink production, on reducing balance
A bakery's ovens and mixing equipment are depreciated on a reducing-balance basis at 20% a year instead of straight-line, reflecting that this kind of equipment loses more value in the earlier years of heavy daily use. On equipment with a £40,000 net book value at the start of the year, that's an £8,000 charge: a debit of £8,000 to 8001 and a credit of £8,000 to 0021. Whichever method is chosen should stay consistent year to year rather than being switched to manage the numbers.
Professional services or agency
A consultancy or agency with no manufacturing equipment simply has nothing to post here — code 8001 exists in the chart of accounts as a Sage default but stays at zero for the life of the company unless it happens to own plant of some kind.
Commonly confused with
Because code 8000 (Depreciation) sits right next to this one in Overheads & Depreciation, it's a common mis-posting target. Code 8001 is specifically for plant/machinery depreciation, while 8000 covers 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 Plant/Machinery 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.