In the world of manufacturing, wear and tear refer to the inevitable decline in equipment performance due to regular use. Unlike sudden damages caused by accidents, wear and tear occur gradually—influenced by friction, heat, and material fatigue. This progressive aging is a key consideration for equipment management, especially in leasing or service contracts, where it helps define what constitutes normal usage versus negligence-based damage.
Understanding the distinction between wear and tear and outright damage is crucial. While wear and tear go hand-in-hand with regular usage, damage stems from improper handling or unforeseen incidents. For example, a slowly corroding pipe is wear and tear, while a burst pipe from overpressure is damage. The table below provides more examples:
| Wear and Tear | Damage |
|---|---|
| Conveyor belts losing efficiency over time. | Belts tearing from excessive weight load. |
| Leaks from gaskets degrading due to normal use. | Hydraulic failure from poor maintenance. |
| Bearings wearing out from routine vibration. | Motor burnouts from poor lubrication. |
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While we can’t erase wear and tear, we can certainly manage it. Here are some strategies to reduce its impact:
Understanding depreciation helps quantify wear and tear over time. Here’s a quick look at two common methods:
This method spreads an asset’s cost evenly across its useful life. Perfect for assets with steady usage.
Example: Depreciating a $50,000 machine at $4,500 per year for ten years.
This method accelerates depreciation, ideal for assets losing value faster initially.
Example: A $50,000 machine might see higher depreciation in its early years due to intense use.
