depletion

Depletion

An accounting term describing the amortization of assets that can be physically reduced.

Notes:

Unlike depreciation and amortization, which mainly describe the deduction of expenses due to the aging of equipment and property, depletion is the actual physical reduction of natural resources by companies.

For example, coal mines, oil fields and other natural resources are depleted on company accounting statements. This reduction in the quantity of resources is meant to assist in accurately identifying the value of the asset on the balance sheet.

See also: Accounting, Amortization, Depreciation, Fundamental Analysis, GAAP

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depletion

The periodic cost assigned for a reduction in the quantity and indicated value of a natural resource such as a mineral deposit or timber. Thus, depletion indicates an activity such as harvesting or mining a natural resource. See also cost depletion, depreciation, percentage depletion.