what is depreciation?

Answer 1

Depreciation is a process in which you allocate a cost to a certain period, to make it "fair".

Say you buy a machine for $50, that you will use for 5 years. If you wrote the expense at the moment you bought it, you would say you had an expense of $50 the first year, and $0 in years 2-5, which would not reflect the reality.

Depreciating, you write, in that example $10 as "depreciation expense" in year 1, another $10 in year 2 and so on... so when you look at your financial statement it will reflect the "reality".

If you plan to sell the machine at the end instead of throwing it away, say at $10, you would depreciate $8 a year, (50-10)/5

Answer 2

Definition 1

A noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. Most assets lose their value over time (in other words, they depreciate), and must be replaced once the end of their useful life is reached. There are several accounting methods that are used in order to write off an asset's depreciation cost over the period of its useful life. Because it is a non-cash expense, depreciation lowers the company's reported earnings while increasing free cash flow.

Definition 2

A decline in the value of a given currency in comparison with other currencies. For instance, if the U.S. dollar depreciates against the Euro, buyers would have to pay more dollars in order to obtain the original amount of euros before depreciation occurred.

Answer 3

The gradual loss of value of an asset due to age, use, wear and tear, and deterioration.

From a tax perspective, assets must be depreciated over time. You can't normally take the cost of an asset as an expense in the year that it was purchased (there are exceptions but that's another topic) but must take a portion of the cost as a depreciation expense over the life of the asset.

Answer 4

A decrease or loss in value, as because of age, wear, or market conditions is known as depreciation.

Answer 5

Depreciation is the amount of loss that an item has accured over a year.

Example: Your car - this year you could sell it for $12,000
last year you could sell it for $16,000
Your depreciation this year from last year is $4,000

Your TV - this year you could sell it for $300
last year you could sell it for $600
Your deprecitation this year from last year is $300

Get it?

Answer 6

depreciation in car is lesser in value of car. For example, U buy a car for $50k and now u can sell it off at less than $50k only.

Answer 7

Is sometimes used as a dollar figure against an original value.
Like New Car after a day the value has depreciated.
Also used to say that something is not as good as it once was,

Answer 8

Well it can have different meaning depending on the context. Few of the Definitions would be as follows. Personally I think one of the best definiton is the last one. Try out the source links I've mentioned below for more details.

A decrease in the value of property.


The reduction in the balance sheet value of a company asset to reflect its loss of value through age and wear and tear.


The decline in the value of a capital asset. Depreciation represents a cost of ownership and the consumption of an asset's useful life.


Decrease in the value of equipment from wear and tear and the passage of time. Depreciation on business equipment is generally deductible for tax purposes.


The decline in value of an asset over a period of time.


A reduction in the value of a tangible asset over time due to wear, age or obsolescence; the allocation of the cost of an asset over time for accounting and tax purposes - an annual depreciation charge in accounts represents the amount of capital assets used up in the accounting period; also, a decrease in the value of a currency in relation to the value of another.


A tax deduction representing a reasonable allowance for exhaustion, wear and tear, and obsolescence, that is taken by the owner of the equipment and by which the cost of the equipment is allocated over time. Depreciation decreases the company's balance sheet assets and is also recorded as an operating expense for each period. Various methods of depreciation are used which alter the number of periods over which the cost is allocated and the amount expensed each period.


A decline in the value of property because of physical or economic changes such as wear and tear; the opposite of appreciation.


A decrease in the value of real property due to a number of causes such as deterioration of the neighborhood.


A decrease in value due to age, wear and tear, and the like.


The decline in the value of an automobile due to normal wear and tear. Based primarily on the number of miles driven (the more miles driven, the greater the depreciation) but also may be influenced by vehicle model, maintenance, general consumer demand for the model and the maker's reputation for quality.


Charges made against earnings to write off the cost of a fixed asset over its estimated useful life. Depreciation does not represent a cash outlay. It is a bookkeeping entry representing the decline in value of an asset that is wearing out.


The decrease in the value of capital stock or the value of a durable input that results from wear and tear and the passage of time.


The decrease in the market value of a vehicle over time. The amount of yearly depreciation is affected by variables including car condition, resale market supply and demand, and reputation of the manufacturer and/or model.


A loss of value in real property brought about by age, physical deterioration, or functional or economic obsolescence.


A fall in the value of a currency due to market forces rather than due to official action.


Normally, charges against earnings to write off the cost, less salvage value, of an asset over its estimated useful life. It is a bookkeeping entry and does not represent any cash outlay nor are any funds earmarked for the purpose.

This is a non-cash expense (also known as non-cash charge) that provides a source of free cash flow. Amount allocated during the period to amortize the cost of acquiring long-term assets over the useful life of the assets. To be clear, this is an accounting expense not a real expense that demands cash. The sum of depreciation expenses of prior years leads to the balance sheet item Accumulated Depreciation


The decrease in the value of any type of tangible property over a period of time resulting from use, wear and tear, or obsolescence.


The reduction in value of a vehicle caused by age, mileage and condition.


A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.


Amortization of the cost of a fixed asset, such as plant and equipment, over several years, or the "depreciable life."


A decline in the value of property; the opposite of appreciation.


A bookkeeping entry that does not require cash outlay nor funds to be earmarked. The entry is a charge against earnings to write off the cost of an asset over its assessed useful life over a set time period. It reduces taxable income but does not reduce cash. The most commonly used depreciation methods are Straight-line Depreciation and Accelerated Cost Recovery System (ACRS).

A decline in the value of property due to changes in market conditions or other causes.


a decrease in price or value; "depreciation of the dollar against the yen"
decrease in value of an asset due to obsolescence or use
disparagement: a communication that belittles somebody or something


Depreciation is an estimate of the decrease in the value of an asset, caused by "wear and tear", obsolescence, or impairment. The use of depreciation affects a company's (or an individual's) financial statements, and, in some countries, their taxes.

Answer 9

Is to devalue something or to lower something...I guess.