Depreciation is thus the decrease in the value of assets and the method used to reallocate, or "write down" the cost of a tangible asset (such as equipment) over its useful life span. Businesses depreciate long-term assets for both accounting and tax purposes. Definition : Depreciation expense is the cost allocated to a fixed asset during a period. Many people think this is a way to “expense” assets over time, but that’s not really true. It is recorded as an expense on the income statement, but it isn’t an expense of the asset. Instead, it is allocating the cost of the asset over its useful life. What Does Depreciation Mean ? Depreciation is a reduction in the value of a tangible fixed asset due to normal usage, wear and tear, new technology, or unfavourable market conditions. Learn about the straight line and diminishing value methods of depreciation , with examples and a quiz to test your knowledge. Depreciation is a decrease in the book value of fixed assets. Depreciation involves loss of value of assets due to the passage of time and obsolescence. Depreciation is an ongoing process until the end of the life of assets. Causes of Depreciation
