Depreciation

Depreciation

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.

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depreciation

The periodic cost assigned for the reduction in usefulness and value of a long-term tangible asset. Because firms can use several types of depreciation, the amount of depreciation recorded on corporate financial statements may or may not be a good indication of an asset's reduction in value. Depreciation not only affects the asset's value as stated on the balance sheet, it also affects the amount of reported earnings. See also Accelerated Cost Recovery System, accelerated depreciation, accumulated depreciation, recapture of depreciation, straight-line depreciation.

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Depreciation. Certain assets, such as buildings and equipment, depreciate, or decline in value, over time.

You can amortize, or write off, the cost of such an asset over its estimated useful life, thereby reducing your taxable income without reducing the cash you have on hand.

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Depreciation

Depreciation is the deduction for the reasonable allowance for the wear and tear of assets with a life of more than one year, including real estate but not inventory, used in a trade or business or held for the production of income.