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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 ?
The top 10 best-selling cars depreciate by pounds 16.
Even though I am a lover of flashy vehicles (my dream car is the BMW 745Li), I'm thinking that an article that features people who are willing to invest up $100,000 on some thing that depreciates in value (and on things that will probably be used for only a fraction of the life of the vehicle) is ill-placed in a magazine that contains the Declaration of Financial Empowerment.
If the dollar depreciates too quickly, it could precipitate a sell-off in stock markets (like Black Monday in 1987, which was instigated by then Treasury secretary James Baker's attempts to push the dollar lower).
If the new MACRS recovery period is longer than the original one, the taxpayer depreciates the adjusted basis at the beginning of the change year over the remaining portion of the longer recovery period, according to Prop.
The group wants changes both in the tax laws affecting how the value of client lists depreciates, and in the Fair Credit Reporting Act protecting agents' proprietary ownership of those lists.