How to Record Monthly Depreciation on Program Equipment as a Program Expense
Recording the monthly depreciation charge on equipment used for program delivery as a direct program cost.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Program Expense: Depreciation | Expense (+) | 200.00 | - |
| Accumulated Depreciation (Program Equipment) | Contra-Asset (+) | - | 200.00 |
💡 Accountant's Note
Depreciation of program assets is classified as a program expense to ensure the full cost of program delivery is captured in functional expense reporting.
Practitioner & Systems Framework
💻 ERP Architecture
Assign each program asset to the program it supports in the fixed asset module. The monthly depreciation automatically posts to Program Expense. Include program depreciation in grant budget proposals so donors understand the full cost of program delivery. For IAS 20 grant-funded assets, depreciation is matched by a corresponding grant income release.
⚠️ Audit Flags
Auditors verify that depreciation is allocated to the correct functional category. Equipment used for multiple programs requires allocation across programs. Equipment listed as program-only that is actually used for administrative purposes will be reclassified, incorrectly inflating the program expense ratio.
📄 Required Documentation
Fixed asset register with program assignment, monthly depreciation schedule, functional allocation basis for shared equipment, IAS 20 deferred income release schedule (for grant-funded assets), and physical asset location record confirming program use.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.