Depreciation Expense |
Depreciation is a method by which the cost of long-term fixed assets (purchases that are expected to provide benefits for the company for a period over one year) is spread over a future period (number of years) when these assets are expected to be in service and help generate revenue for a company. Depreciation quantifies the wear and tear (from use and passage of time) of the physical asset through a systematic decrease (depreciation) of the assets’ book (historical) value.
Depreciable Fixed Assets Include:
Land is a fixed asset but is not depreciated. |
Major Asset Classes and Their Typical Useful Lives
|
9. Depreciation
Exercise
|
Get Crash Course in Accounting and Financial Statement Analysis, Second Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.