Definition, Meaning & Synonyms
depreciation-expense
Noun
/dɪˌpriː.ʃiˈeɪ.ʃən ɪkˈspens/
Definition
Depreciation expense refers to the accounting method of allocating the cost of a tangible asset over its useful life.
Examples
- Each year, the company records a depreciation expense of $10,000 for its machinery.
- The depreciation expense on the building will affect the company’s overall financial statements.
- Understanding depreciation expense is crucial for accurate financial reporting.
Meaning
It represents the decrease in value of an asset over time due to factors like wear and tear, age, or obsolescence. Businesses use this method to account for the declining value of assets, which helps to spread the cost of the asset throughout its operational life.
Synonyms
- asset depletion
- capital expense
- amortization
