Plant & Machinery and Its Depreciation: Codes 0020 & 0021

Fixed assets bought to help produce or deliver a service — like plant and machinery — are recorded at cost when purchased, but their value doesn't stay at cost forever. Sage tracks the original cost and the accumulated loss in value in two separate codes, so the balance sheet always shows both figures rather than quietly netting them off.

The two codes, and what each one holds

Code 0020 — Plant and Machinery records the original purchase cost of machinery and production equipment bought for the business to use, not resell. It's a Fixed Assets code and normally carries a debit balance: buying a new machine debits it, and only disposing of the asset credits it back down.

Code 0021 — Plant/Machinery Depreciation is the accumulated depreciation account sitting alongside 0020 — a contra-asset account that normally carries a credit balance, the opposite of the asset it relates to. Each year's depreciation charge (posted as an expense to code 8001) increases this credit balance, gradually reducing the machine's net book value without ever touching the original cost recorded in 0020.

A worked example

Say a business buys a new production machine for £18,000 (excluding VAT) and depreciates it on a straight-line basis over 6 years.

Purchase (code 0020): £18,000 debited as the asset's cost, unchanged until disposal.

Annual depreciation charge (code 8001): £18,000 ÷ 6 = £3,000 a year, debited as an expense.

Accumulated depreciation (code 0021): credited £3,000 each year — after three years this credit balance reaches £9,000, meaning the machine's net book value (0020 minus 0021) has fallen to £9,000, even though 0020 itself still reads £18,000.

Why this matters day to day

Keeping cost and depreciation in separate codes means you can always see both the original spend and how much value has been written off, which matters for fixed asset registers and insurance valuations. Posting a disposal to the wrong code, or forgetting to remove the accumulated depreciation when an asset is scrapped, is one of the more common ways a fixed asset schedule drifts out of line with reality.