What is depreciation?

  • (noun): A decrease in price or value.
    Example: "Depreciation of the dollar against the yen"
    See also — Additional definitions below


Depreciation refers to two very different but related concepts:

Read more about Depreciation.

Some articles on depreciation:

Tax Depreciation - Averaging Conventions
... Depreciation calculations can become complex if done for each asset a business owns ... assets of a similar type acquired in the same year into a “pool.” Depreciation is then computed for all assets in the pool as a single calculation ... One half of a full period depreciation is allowed in the acquisition period and in the final depreciation period ...
Amortization (tax Law) - Depreciation
... A corresponding concept for tangible assets is depreciation ... for allocating amortization to each tax period are generally the same as for depreciation ...
Simon V Commissioner - Decision
... pointing out that "taxpayers have long been allowed asset depreciation deductions in order to allow them to allocate their expense of using an income-producing asset to the periods that are ... This is so that depreciation taken in a given year represents that year’s reduction of the asset through use ... Prior to the passage of the Economic Recovery Tax Act of 1981 (ERTA), the depreciation of personal property was solely determined by § 167 of the Internal ...
Accelerated Depreciation - Example
... Under the most simple form of depreciation, the company might allocate $100 of the cost of the generator to its expenses every year, until the $1000 capital expense has been "used up ... a) Normal depreciation the company claims $100 in depreciation every year and has a tax profit of $100 it must pay tax of $20 on the $100 gain ... b) Accelerated depreciation the company claims $200 in depreciation for the first five years, and nothing for the last five years ...
Accelerated Depreciation
... Accelerated depreciation refers to any one of several methods by which a company, for 'financial accounting' or tax purposes, depreciates a fixed asset in such a way that the amount ... For financial accounting purposes, accelerated depreciation is generally used when an asset is expected to be much more productive during its early years, so that ... For tax purposes, accelerated depreciation provides a way of deferring corporate income taxes by reducing taxable income in current years, in exchange for ...

More definitions of "depreciation":

  • (noun): Decrease in value of an asset due to obsolescence or use.
    Synonyms: wear and tear

Famous quotes containing the word depreciation:

    The idea that information can be stored in a changing world without an overwhelming depreciation of its value is false. It is scarcely less false than the more plausible claim that after a war we may take our existing weapons, fill their barrels with cylinder oil, and coat their outsides with sprayed rubber film, and let them statically await the next emergency.
    Norbert Wiener (1894–1964)

    The foundation of humility is truth. The humble man sees himself as he is. If his depreciation of himself were untrue,... it would not be praiseworthy, and would be a form of hypocrisy, which is one of the evils of Pride. The man who is falsely humble, we know from our own experience, is one who is falsely proud.
    Henry Fairlie (1924–1990)