Fixed-asset registers and depreciation schedules
When a business buys something durable — a machine, a vehicle, a set of computers — that purchase is not simply an expense; it becomes an asset that is used up gradually over years. The fixed-asset register is the record that tracks those assets and their depreciation, and it is also where the difference between accounting and tax quietly matters most. This guide explains the register, depreciation, and the book-versus-tax distinction.
What the register holds
A fixed-asset register is the detailed list of a business's long-lived assets, with the key facts about each: its cost, the purchase date, the date it was placed in service (put into use), its depreciation to date, and its current book value (cost less accumulated depreciation). This register is what supports the fixed-asset total on the balance sheet and the depreciation expense on the profit-and-loss, and it is the source you rely on when an asset is later sold, scrapped, or replaced. Without it, the asset figures in the accounts are unverifiable.
Depreciation spreads the cost
Because a durable asset earns its keep over several years, its cost is spread across those years through depreciation rather than expensed all at once. Each period, a portion of the asset's cost becomes a depreciation expense, and the asset's book value falls by the same amount (tracked in accumulated depreciation). This matches the cost of the asset to the periods it helps generate income — the same matching logic that underpins accrual accounting. So a $12,000 machine expected to last several years does not produce a $12,000 expense in year one; it produces a series of smaller depreciation charges over its life.
Book depreciation versus tax depreciation
Here is the point that trips businesses up: book depreciation and tax depreciation are not the same. Book depreciation spreads the cost over the asset's useful life in the accounts. Tax depreciation follows the separate rules the IRS sets, which include accelerated write-offs such as Section 179 expensing and bonus depreciation, covered in Section 179 and bonus depreciation. The two figures can diverge sharply — a business might write an asset off immediately for tax while depreciating it over years in its books. That is why many businesses maintain both: the book figure drives the accounts and the reported profit, while the tax figure drives the return.
We maintain your fixed-asset register and book and tax depreciation schedules, so the balance sheet and the return both hold up.
Avail our bookkeeping servicesCapitalization policy and disposals
The register only works with a consistent capitalization policy: a rule for when a purchase is a capital asset (put on the balance sheet and depreciated) versus a small purchase expensed immediately. Broadly, a long-lived item above a chosen cost threshold is capitalized; a minor or short-lived one is expensed. When an asset is eventually disposed of, the register drives the entry — removing the asset and its accumulated depreciation and recognising any gain or loss — which also has tax consequences worth checking. Assets are frequently bought with borrowing, so the register sits alongside the loan records, and updating depreciation is a standard step in the period-end close.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
Questions people also ask
What is a fixed-asset register?
It is the detailed record of the long-lived assets a business owns — equipment, vehicles, furniture and the like — showing each asset's cost, purchase date, the date it was put into use, its depreciation, and its current book value. It underpins the fixed-asset figures on the balance sheet and the depreciation expense on the profit and loss, and it is what you rely on when an asset is sold or scrapped.
What is the difference between book and tax depreciation?
Book depreciation is how an asset's cost is spread over its useful life in the accounts, to match the cost to the years it is used. Tax depreciation follows the separate rules the IRS sets, which include accelerated write-offs such as Section 179 and bonus depreciation. The two can differ significantly, so many businesses track both — the book figure for their accounts and the tax figure for their return.
When should a purchase be capitalized rather than expensed?
Broadly, when it is a long-lived asset expected to be used across several years rather than consumed now, and its cost is above the threshold the business sets for capitalizing. A capitalized item goes onto the balance sheet and is depreciated; a smaller or short-lived purchase is expensed immediately. A consistent capitalization policy keeps the treatment predictable.
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