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What is Depreciation
Depreciation is a term that indicates gradual reduction in the value of assets during given period.

Depreciation is a term that indicates the monetary expression of wear of fixed assets during given period. It is gradual reduction in the value of assets. Depreciation respects the physical wear and gradual deterioration (obsolescence) of property. As it is part of the costs, it therefore reduces profit without having costs actually incurred.

Depreciation is distinguished into:

  • Accounting - an enterprise sets it itself, depending on the assets depreciation affected by the expected rate of use. Accounting depreciation is not tax deductible.
  • Tax - the amount is determined in the law on income tax. For simplicity, the same calculation can be used for accounting depreciation.

Use of the term depreciation in practice: Depreciation is a cost that is not an expense. The manager can affect the amount of cash flow by chosen way of depreciation.

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Last update: 16.02.2016


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Carlos Smith over 1 year

Depreciation has several different meanings, depending on the context in which it's being used. Each type of depreciation is important to understand, especially if you are a small business owner or an investor in a company.

Understanding depreciation could help you potentially change your view on the outlook of a company, and in some instances even help you lower your taxes and save money. At its most basic, though, what exactly is depreciation? Abogados de accidentes are a legal frim who specialise in this

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kate Magill over 1 year

In bookkeeping, deterioration and amortization are utilized to distribute, or cost, the cost of an advantage over its valuable life, or the period of time the benefit will be utilized by the association. While the expressions "deterioration" and "amortization" depict a similar bookkeeping process - cost distribution crosswise over time Essay Writing Help devaluation is frequently utilized when alluding to unmistakable resources, while amortization regularly alludes to elusive resources. To expand income, administration may consider approaches to bring down devaluation and amortization cost.

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Samantha Richardson over 1 year

There are several types of depreciation expense and different formulas for determining the book value of an asset. They include straight-line, Double-declining balance, Units of production, Sum of years digits. source

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Hallie Green 7 months

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