What is Depreciation?

In accounting, depreciation is a means by which the cost of an asset can be measured and distributed throughout its useful life. Depreciation refers particularly to the diminishing of an asset’s value as it ages and can be applied only to tangible assets that are quantifiably measurable. Any asset with a value that gradually decreases is subject to the convention of depreciation, meaning an accountant may break up the total cost of the asset and assign the increments to future write-offs.

A broader depreciation definition includes a simple decrease in market value over time, typically referring to property, home or vehicular depreciation.

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