Depreciation is an accounting and tax principle that acknowledges the useful life of a physical, long-term asset, which is an asset with a life span exceeding 12 months, and accounts for wear and tear ...

Over time, the assets a company owns lose value, which is known as depreciation. As the value of these assets declines over time, the depreciated amount is recorded as an expense on the balance sheet.

Amortization and depreciation are non-cash expenses on a company's income statement. Depreciation represents the cost of capital assets on the balance sheet being used over time, and amortization is ...

Assets like equipment, vehicles and furniture lose value as they age. Parts wear out and pieces break, eventually requiring repair or replacement. Depreciation helps companies account for the ...

Accounting doesn't allow you to depreciate inventory. You can depreciate fixed assets that you own for years, reducing the value on your books to reflect their age. Over time, depreciation accumulates ...

David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning.