For the first eleven months, the financial statements will report $44,000 of depreciation expense. Then in the 12th and final month of the year no depreciation expense is recorded. This means that depreciation expense will beat its budget by $4,000 ($44,000 of actual depreciation versus the annual budget of $48,000). This favorable $4,000 is the controller's cushion. The idea is that this will cushion the effects of some unexpected expenses or losses that come to light at the end of the accounting year.
The controller's reserve or controller's cushion is related to a concept known as budgetary slack.
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