1) In the accounting context, the allocation of a physical asset's cost over its useful life.
2) The gradual loss in value of an asset.
Definition from Nolo’s Plain-English Law Dictionary
The actual or theoretical gradual loss of value of an asset (particularly business equipment or buildings) through increasing age, natural wear and tear, or deterioration, even though the item may retain or even increase its replacement value due to inflation. Depreciation may be used as a business deduction for income tax reduction, spread out over the expected useful life of the asset (straight line) or at a higher rate in the early years of use (accelerated).
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:14 pm