Depreciation is the process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner. It is a process of cost allocation, not a process of asset valuation.
Depreciation applies to three classes of plant assets: land improvements, buildings, and equipment. Each asset in these classes is considered to be a depreciable asset, because the usefulness to the company and revenue-producing ability of each asset will decline over the asset’s useful life.
Depreciation is an annual deduction of a part of the cost of an asset. In general, it means a decline in market value.
Depreciation this represents the loss of value from an existing stock of real capital (for an individual company or for the whole economy), reflecting the normal wear-and-tear of machinery, equipment, and infrastructure. A company or country must invest continuously just to offset depreciation, or else its capital stock will gradually run down.
Depreciation is an accounting technique by which management gradually recovers the cost of expensive fixed assets over the course of their expected lives.
Depreciation is the procedure for speeding the cost of a long-term asset over the course of its useful life.
Webster Dictionary Meaning
- The falling of value; reduction of worth.
- the state of being depreciated.
More from this Section
- Change-of-plan provision
Change-of-plan provision allows life insurance policyholders to exchange their present ...
- Free In (FI)
Free In (FI) is an international trade term meaning that all expenses for loading into ...
- Vertical analysis
Vertical analysis, also called common-size analysis, is a technique that expresses each ...
- Internet service sites
Internet service sites is the computer files or pages set up on the World Wide Web by ...
- FDIC Improvement Act
is a law passed by the U.S. Congress in 1991 to recapitalize the Federal Deposit Insurance ...