Definition: Depreciation is an accounting treatment reflecting
- the decrease in value of a tangible asset (fair value depreciation).
- the allocation of the cost of a tangible asset to the periods in which it is used (traditional depreciation).
The precise methods for calculating D differ per jurisdiction (country), accounting standard, and asset type. Accounting rules may require that an impairment charge or expense be recognized if the value of an asset declines suddenly.
D is similar to Amortization and Depletion, but the second is used for intangible assets and the last for minerals and oil.
A is the opposite of appreciation.
More on accounting and auditing: Accounting Cycle, Accounts Payable, Accounts Receivable, Accrued Revenue, Amortization, more...
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