Depreciation

Overview

Depreciation is the gradual decline in the value of an asset caused by wear and tear, obsolescence or other economic factors.

Common Use Cases

• Calculating asset depreciation charges.
• Reducing carrying values on the balance sheet.
• Adjusting resale prices.
• Optimising taxation.

Examples in Small Businesses

• Calculating depreciation on industrial equipment.
• Updating asset values for new financing.
• Analysing the longevity of existing assets.