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NOVEMBER 2024 I PCB007 MAGAZINE 81 Depreciation and PCB Design As an engineer, you may wonder how this affects your work. Here's why understanding depreciation matters to you: 1. Equipment lifespan: Knowing the expected useful life of the machinery you work with helps you gauge when it might need replacement. is can impact design and product development timelines, equipment capacity, and maintenance schedules. 2. Cost considerations: Depreciation influ- ences the overall cost structure of the proj- ects you're working on. If the equipment you use is nearing the end of its useful life, the cost of producing each board might increase as new equipment needs to be purchased. 3. Project planning: Depreciation can affect budgeting for future projects. For instance, if your company is using equipment that's fully depreciated, its replacement cost might impact future projects' capital budgets. The Impact on Financial Statements To bring it full circle, depreciation impacts two main financial statements: 1. Income statement: Depreciation is recorded as an expense, reducing the com- pany's taxable income. is means that although no cash is leaving the business, depreciation lowers reported profits. 2. Balance sheet: Over time, the value of the asset on the balance sheet decreases. is reduction is balanced by an increase in accumulated depreciation—a contra asset account. Conclusion While depreciation may seem like just an accounting concept, it has direct implications for your role as a design or PCB fabrication engineer. Understanding how assets are depre- ciated can help you better grasp the cost struc- ture of the equipment you work with, antici- pate when machinery may need replacement, and appreciate the financial decisions being made around you. Ultimately, this knowledge can enhance your strategic thinking and allow you to contribute to more cost-effective, long- term planning within your company. PCB007 Doug Palladino is vice president of finance at ASC Sunstone Circuits.