depreciation definition
Answers
Explanation:
Def- The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation. ... Machinery, equipment, currency are some examples of assets that are likely to depreciate over a specific period of time.
When a company buys an expensive fixed asset -- such as costly software, new computers, or manufacturing equipment -- the asset will depreciate (i.e. wear down or become obsolete) over time. Rather than record one large expense in the first year, company accountants will typically depreciate the asset and spread out its expense over several years.
While there are many methods to calculate depreciation (we'll get to those), the most basic is the "straight line" method. Under the straight line method, the depreciation of a given asset is evenly divided over its useful lifetime.