What is Depreciation?

Depreciation is the process of allocating the cost of a tangible asset over its useful life. It is most commonly applied to assets that are not used up quickly, such as buildings, machinery, and vehicles.

In order to calculate depreciation you need to know what the asset’s value is and how long it will be in use. The value may be determined by taking into account the purchase price or what it would cost to replace the asset with a new one.

The useful life will depend on how much use can be gotten out of an asset before it needs to be replaced. There are many different approaches for calculating depreciation and these methods vary depending on which accounting method you are using (cash or accrual).

Depreciation is a way for a business to spread out the cost of an asset over time

Depreciation is a way for a business to spread out the cost of an asset over time.

Depreciation is a way for a business to spread out the cost of an asset over time. It allows companies to deduct the cost of an asset from their taxable income, which helps them save on taxes.

What are the Different Types of Depreciation?

Depreciation is the process of allocating the cost of a tangible asset over its useful life. The amount allocated to each year is called a depreciation expense.

There are two types of depreciation, straight line and written down. Straight-line depreciation methods allocate equal amounts to each year of an asset's useful life, while written down method allocates more in the early years and less in later years.

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