Depreciation

1. An accounting charge reflecting the estimated annual cost to a business of a capital asset over its estimated useful economic life. Accounting depreciation seeks to ensure that the total accounting cost of a capitalised asset is appropriately spread and matched to the economic benefits of using the asset.

Methods of spreading the total accounting cost include Straight line, Reducing balance and Sum of the digits.

2. More generally, any decrease in the value of an asset resulting from the passing of time.

3. A decrease in the value of a currency.

See also

• Accumulated depreciation
• Amortisation
• Appreciation
• Assets
• Capital allowances
• EBITDA
• Net book value
• Reducing balance
• Straight line
• Sum of the digits
• Tax depreciation
• Writing down allowance