Depreciation Finance Wiki
Depreciation: A Finance Wiki Overview
Depreciation, in financial accounting, is the systematic allocation of the cost of a tangible asset over its useful life. It represents the decline in the asset’s value due to wear and tear, obsolescence, or other factors. Instead of expensing the entire cost of an asset in the year it’s purchased, depreciation spreads the expense over the periods the asset is used to generate revenue. This aligns with the matching principle, which aims to match expenses with the revenues they help generate.