depreciation
Definitions (2)
1. A noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. Most assets lose their value over time (in other words, they depreciate), and must be replaced once the end of their useful life is reached. There are several accounting methods that are used in order to write off an asset's depreciation cost over the period of its useful life. Because it is a non-cash expense, depreciation lowers the company's reported earnings while increasing free cash flow.
2. A decline in the value of a given currency in comparison with other currencies. For instance, if the U.S. dollar depreciates against the Euro, buyers would have to pay more dollars in order to obtain the original amount of euros before depreciation occurred.
Popular 'Accounting' Terms
Related Terms
Mentioned in these terms
- historical cost depreciation
- Earnings Before Interest, Taxes, Depreciation and Amortization
- age-life depreciation
- currency depreciation
- curable depreciation
- Earnings Before Interest, Taxes, Depreciation, Amortization and Rent
- operating income before depreciation and amortization
- allowance for depreciation
- replacement cost depreciation
- asset depreciation risk
