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78 PCB007 MAGAZINE I NOVEMBER 2024 Feature Article by Doug Palladino ASC SUNSTONE CIRCUITS As a PCB design engineer, your focus is on creating innovative, cost-effective designs. However, the financial aspects behind your designs—such as depreciation—play a signifi- cant role in the overall business. While depre- ciation may sound like "accounting speak," understanding it can help you make better decisions for your projects, especially when dealing with equipment, machinery, or even intangible assets like soware licenses. Most people don't fully understand the meaning of depreciation, especially young engineers and designers entering the field, yet when it comes to calculating the total cost to manufacture or the total cost to operate, it is an important financial piece of the total manufacturing cost algorithm. Here's a breakdown of depreciation from a financial controller's perspective, aimed at those less familiar with accounting. Defining Depreciation Depreciation is the process of allocating the cost of a tangible asset over its useful life. In other words, instead of recognizing the full equipment cost as an expense when pur- chased (e.g., a piece of equipment, a tool, or a machine), the expense is spread out over mul- tiple years based on its expected useful life. is helps the financial reporting by prevent- ing a large spike in expenses in the month the equipment was purchased. For instance, if your company buys an $80,000 pick-and-place machine for PCB assembly Understanding Depreciation for Electronics Manufacturers