depreciation
Sign in to savethumb|380px|An asset depreciation at 15% per year over 20 years
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Depreciation is the decrease in value of an asset over time, such as when a piece of equipment loses worth as it ages and gets used. It matters because it affects how much an asset is worth on a company's financial records and can influence how much profit a business reports.
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Article
25 sectionsContents
- Accounting concept
- Depreciable basis
- Impairment
- Depletion and amortization
- Effect on cash
- Accumulated depreciation
- Methods for depreciation
- Straight-line depreciation
- Diminishing balance method
- Annuity depreciation
- Sum-of-years-digits method
- Units-of-production depreciation method
- Group depreciation method
- Composite depreciation method
- Tax depreciation
- Capital allowances
- Tax lives and methods
- Additional depreciation
- Real property
- Averaging conventions
- Fixed rate of Depreciation
- Economics
- See also
- References
- Further reading
thumb|380px|An asset depreciation at 15% per year over 20 years
In accountancy, depreciation refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used (depreciation with the matching principle).