What is 'Depreciation'?

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value over time ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | INVESTOPEDIA Depreciation Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes. For tax purposes, businesses can deduct the cost of the tangible assets they purchase as business expenses; however, businesses must depreciate these assets according to IRS rules about how and when the company can take the deduction. Breaking it Down: Depreciation is often a difficult concept for accounting students as it does not represent... Read More » Related to "Depreciation" Understanding Methods and Assumptions of Depreciation Examine how methods and assumptions in depreciation impact the value of long-term assets and how these factors can affect short-term earnings results. Read More » What's the difference between amortization and depreciation? Learn the difference between amortization, depreciation, and depletion and how companies use these accounting methods to their advantage. Read More » How Are Accumulated Depreciation and Depreciation Expense Related Understand the relationship between accumulated depreciation and depreciation expense. Learn how each one is accounted for on a company's financial statements. Read More » Related Definitions Sum-Of-The-Years' Digits Sum-of-the-years'-digits is an accelerated method for calculating an asset's depreciation. Read More » Economic Depreciation Economic depreciation is a measure of the decrease in value of an asset over time. Read More » Annuity Method of Depreciation The annuity method of depreciation is a process used to calculate depreciation on an asset by calculating its rate of return as if it was an investment. Read More » Unit of Production Method The unit of production method calculates depreciation when the life of an asset is best measured by how much the asset has produced. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com If you wish to unsubscribe, please click here, or manage subscriptions 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy