Depreciation

Depreciation is the accounting method of allocating the cost of a tangible asset over its useful life. It represents the decline in value of assets like equipment, vehicles, and buildings.

Common depreciation methods include straight-line, declining balance, and units of production. Depreciation is a non-cash expense that reduces taxable income and appears on the income statement. Understanding depreciation is important for business accounting and tax planning.

Related Terms

Balance Sheet

A balance sheet is a financial statement that reports a company's assets, liabilities, and sharehold...

Amortization

Amortization is the process of paying off debt through regular payments over time. Each payment cove...

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