DEPRECIATION | DEFINITION | EXPLANATION

"Depreciation: A Key Concept in Accounting

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. It represents the decrease in value of an asset due to wear and tear, obsolescence, or other factors.

Key Points:

- Depreciation is a non-cash expense, as it doesn't involve an actual cash outflow.
- It helps businesses match the cost of an asset with the revenue it generates over time.
- There are various depreciation methods, including straight-line, declining balance, and units-of-production.
- Depreciation is used for tax purposes to reduce taxable income.