Accounting Dictionary - Accounting Terms & Definitions
A: Depreciation
Depreciation is a decrease in the value of the fixed asset during its useful life. Depreciation concept applies only to the Fixed Asset category, i.e. those assets which re being used by the business for a period longer than one year.
Depreciation means that acquisition cost of the fixed asset is not included into the expenses on the Income Statement at the moment of acquisition, but is distributed over the useful life of the asset, i.e. period during which the asset will be used by the business to earn income.
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