How Do You Track Machine Depreciation and Maintenance Cost per Asset?

To track depreciation and maintenance cost per asset, give every machine a unique asset record, set its cost, useful life, residual value and depreciation method once, post depreciation automatically each period, and charge every repair, spare part, outside service and hour of downtime to that same record. Then divide the total by operating hours to get a cost per hour, and compare it across machines to decide what to repair, keep or replace.

Bsquare Solutions builds Pothera Asset Management as part of Pothera ERP, so asset, maintenance, stores and accounts data can live in one system.

Why track depreciation and maintenance together?

They are two sides of what a machine costs you. Depreciation spreads the purchase cost over the machine’s life. Maintenance is what you spend to keep it running. A machine can look cheap on the books because it is largely depreciated, while costing a fortune in repairs and downtime. Seeing both per asset tells you which machines earn their place.

Most manufacturers keep depreciation in the accounts file and maintenance in a register, a logbook or a WhatsApp group, so nobody ever sees the total.

What do you need to track depreciation correctly?

For each asset, record:

Companies Act rules and tax rules differ, so keep both views:

●     Books (Companies Act, Schedule II): the Act gives useful lives, not rates. General plant and machinery is 15 years, and the residual value is generally not more than 5% of cost. You may use straight-line or written-down value.

●     Tax: income-tax depreciation works on a block of assets at prescribed written-down-value rates, for example 15% for general plant and machinery and 40% for computers in current rate tables. Confirm current provisions with your CA, because the income-tax law has been restructured.

The gap between the two creates deferred tax, so your system should hold both schedules.

How do the main depreciation methods compare?

Worked example (illustrative). A machine costs ₹20,00,000, has a 15-year life and a 5% residual value of ₹1,00,000, so the depreciable amount is ₹19,00,000.

Straight-line suits steady use, written-down value front-loads the charge, and units of production suit machines whose usage swings. Whichever you choose, apply it consistently and agree it with your auditor.

How do you calculate maintenance cost per asset?

Add up everything spent to keep one machine running during a period:

Total cost of ownership per asset-year = depreciation + maintenance + downtime cost.
 Cost per operating hour = total cost ÷ operating hours.

Worked example (illustrative), same machine, one year:

With 4,000 operating hours, the cost is about ₹131.67 per hour. Maintenance alone (₹2,40,000) is ₹60 per hour. Downtime was the biggest single item, which is why tracking stoppages matters as much as tracking repairs.

Which KPIs show whether a machine is healthy?

Set your own threshold for the last one. Many plants review any machine whose annual maintenance cost keeps rising while its availability falls.

How do you decide whether to repair, keep or replace a machine?

Compare, for each machine:

1. Cost per operating hour against similar machines
2. The trend in repair cost and downtime over three years
3. Remaining book value and tax value
4. Cost of a replacement, including installation and training
5. How critical it is to your orders

A machine whose cost per hour keeps rising while it blocks key orders is a replacement candidate, even if it is fully depreciated.

What goes wrong when you track this in Excel?

Bsquare’s 2026 survey of 500 Indian manufacturers found that among adopters, 73% saw improved inventory accuracy, 61% better financial reporting and 54% better production output visibility. Spares, accounts and machine data are exactly where connected records help. Read the full research report.

What should asset management software do?

●     Keep one fixed asset register with a tag or QR code for each machine

●     Calculate and post depreciation automatically, under books and tax schedules

●     Schedule preventive maintenance by date or by running hours

●     Create work orders for breakdowns and charge labour, spares and outside services to the asset

●     Link stores so spares issued reduce stock and hit the machine’s cost

●     Capture machine hours and downtime from production

●     Report cost per asset, per hour and per department

●     Record AMC and warranty dates and alert before they lapse

How does Pothera ERP help?

Bsquare describes Pothera Asset Management as tracking every machine, vehicle and piece of infrastructure, with maintenance, depreciation management, preventive scheduling and return-on-investment analytics for every physical asset. Because it runs inside the same platform as the rest of Pothera ERP, it connects to:

●     Inventory management, so spares issued to a machine reduce stock and charge the asset

●     Production and planning, so machine hours and stoppages come from shop-floor records

●     Accounts and finance, so depreciation and maintenance costs post to the books

●     Procurement, so spare-part purchases and vendor invoices link to assets

●     HR and payroll, so maintenance staff time can be costed

Shri Tirupati Enterprises, a copper rod manufacturer, runs Pothera ERP across 16 modules, including plant maintenance and fixed assets. Read its case study and browse all our case studies.

Related reading: Manufacturing ERP vs accounting software, ERP implementation roadmap for Indian manufacturers, ERP for CFOs: costing, cash flow and audit features and ERP software cost for a small manufacturing business. For the asset module on the Pothera site, see Pothera asset management software and the guide Asset Management Software: The Complete Guide for Modern Businesses.

How do you set this up in five steps?

1. Build the register. List every machine with a tag, cost, date of use, location and class.
2. Fix the depreciation policy. Agree useful life, residual value and method per class with your auditor.
3. Charge every cost to an asset. Make the asset ID mandatory on maintenance work orders, spare issues and vendor bills.
4. Record downtime. Ask operators to log each stoppage with a reason.
5. Review monthly. Look at cost per hour, MTBF and the top five costliest machines, and act on them.

Frequently asked questions

How do you track depreciation for each machine?
 Keep a fixed asset register with each machine’s cost, date of use, useful life, residual value and method. Software then calculates and posts the charge every period.

What is the difference between book and tax depreciation?
 Book depreciation under the Companies Act depreciates each asset over its useful life, using straight-line or written-down value. Tax depreciation uses prescribed written-down-value rates on a block of assets. Companies keep both and account for the difference as deferred tax.

What is the useful life of plant and machinery under the Companies Act?
 Schedule II gives 15 years for general plant and machinery, with different lives for specific industries and continuous-process plant. Residual value is generally not more than 5% of cost.

How do you calculate maintenance cost per machine?
 Add preventive and breakdown labour, spares, outside services and, if you want the full picture, downtime cost, all charged to that machine. Divide by operating hours for cost per hour.

What is MTBF and MTTR?
 MTBF is the average operating time between failures. MTTR is the average time to repair a failure.

When should I replace a machine?
 When its cost per hour keeps rising, availability keeps falling and a replacement would cost less over its life than continued repairs. Compare against your own thresholds.

Can ERP track depreciation and maintenance together?
 Yes. When asset, stores, production and accounts data share one database, repairs, spares and depreciation all post to the same asset record.

Is asset management software only for large factories?
 No. Any manufacturer with several machines or vehicles benefits once repairs, spares and breakdowns become hard to follow.

See your machine costs in one place

Book a Pothera ERP demo through our contact page and bring a list of your five most important machines, or estimate your investment and payback first.