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To allocate the purchase cost of an asset over its life.


The gradual reduction of an asset's value. It is an expense, but because it is non-cash, it is often effectively a tax write-off; that is, a person or company usually may reduce his/her/its taxable income by the amount of the depreciation on the asset. Because there are many different ways to account depreciation, it often bears only a rough resemblance to the asset's useful life. This may further benefit the company as they may continue to use the asset tax-free after its value has technically depreciated to nothing. See also: Amortization.


To reduce the value of a long-term tangible asset.
References in periodicals archive ?
That said, in the opposite case, when the lira depreciates, exporters are able to decrease their prices in terms of the dollar or the euro according to the difference existing between import price-cost increases and export price rises in terms of the lira.
72,000 crore, and that for every rupee that depreciates, they lose Rs 8000 crore.
With domestic demand expected to recover in 2010, Saudi Arabia may be at a risk of higher inflation if the US dollar depreciates further.
In contrast, a BMW 325d SE Coupe depreciates by only 25% in its first year, by 37% after two years and by 47% after three years.
Buying a cheaper car that depreciates rapidly is a false economy.