Film Accounting Glossary
Depreciation
What is depreciation?
Depreciation is the accounting recognition that a physical asset loses value over its useful life, charged as an expense across the years the asset is used.
Productions rarely depreciate much because they rent rather than own, but vendors do: a picture-car company depreciates its fleet, and that depreciation is a real part of what a rental rate has to cover. Confusing depreciation with a cash cost is a common budgeting error on the vendor side.
Example
A picture-car company buys a hero vehicle for $90,000 and depreciates it over six years. That $15,000 a year is a real cost the rental rate has to cover, even though no cash leaves the business in the years after purchase.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Vendor and equipment-house books rather than production budgets, since productions rent rather than own. Easy to mistake for a cash cost when pricing a rate card.
Common mistake
Treating depreciation as a cash cost when pricing a rate card. The cash left when the asset was bought; depreciation is the recognition of that cost over time.
Related questions
- Do film productions record depreciation?
- Rarely, because productions rent rather than own. Vendors and equipment houses do, and that depreciation is part of what a rental rate has to recover.
- How does depreciation affect a picture-car rental rate?
- The vehicle loses value over its working life, so the rate has to cover that decline alongside maintenance, insurance, storage, and the vendor's margin.