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Depreciation |
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Depreciation1. A fall in the value of a country's currency on the exchange market, relative either to a particular other currency or to a weighted average of other currencies. The currency is said to depreciate. Opposite of "appreciation." 2. The decline in value or usefulness of a piece of capital over time, and/or with use.Depreciation(1) Decrease in value to real property improve-ments caused by deterioration or obsolescence. (2) A loss in value as an accounting procedure to use as a deduction for income tax purposes.DepreciationThe charge in a company's accounts which reflects the reduction in value of an asset over time as its useable life is exhausted.Depreciation is charged before calculation of profit, on the grounds that the use of capital assets is one of the costs of being in business and one of the contributors to profit.There are two main methods of depreciation:Straight line: the residual (scrap) value of the asset is deducted from its original cost, and the resultant figure is divided by the estimated life of the asset. The result of that is deducted annually over the life of the asset. So an asset that costs £10,000 and that has a residual value of £200 with a useable life of 4 years is depreciated by £2450 per year.Reducing balance: the amount of annual depreciation is a constant proportion of the cost of the asset.Depreciation has no effect on cash flow. It is just an accounting procedure.Similar MatchesCapital depreciationCapital depreciationSee depreciation. Currency depreciationCurrency depreciationA decline in the value of one currency relative to another currency. Depreciation occurs when, because of a change in exchange rates, a unit of one currency buys fewer units of another currency. Straight line depreciationStraight line depreciationAmortizing or apportioning an equal dollar amount of depreciation in each accounting period. Earnings before interest, taxes, and depreciation (EBITD)Earnings before interest, taxes, and depreciation (EBITD)A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation expenses are not included in the costs. Asset Depreciation Range SystemAsset Depreciation Range SystemA range of depreciable lives the IRS allows for particular classes of assets. Further SuggestionsReal appreciation or depreciationDouble declining balance depreciation method (DDB) Book Depreciation Depreciation tax shield Double Declining Balance Method Of Depreciation Accrued Depreciation Earnings before interest, taxes, depreciation, and amortization (EBITDA) Double declining balance depreciation Declining Balance Method Of Depreciation Capital appreciation or depreciation Currency depreciation Recapture Of Depreciation Sum of the years digits depreciation |
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