Depreciation

How it is used

Assets are depreciated over their useful life, often on a straight-line basis. Depreciation is a non-cash expense, so it is added back in the cash flow statement. Accumulated depreciation reduces the asset's book value.

Example sentences

1. Depreciation on laptops is calculated over three years on a straight-line basis.

2. Depreciation for the year was 12 million lira, most of it on the new production line.

Common collocations

• depreciation expense
• accumulated depreciation
• straight-line depreciation
• useful life
• depreciate an asset

Related terms

• amortizationThe gradual spreading of the cost of an intangible asset, such as software, a licence or a patent, over its useful life, recorded as an expense.
• fixed assetA long-term physical asset that a business uses to operate rather than to sell, such as buildings, machinery, vehicles or computers.
• impairmentA fall in the value of an asset below the amount shown in the books, recorded as a loss so that the asset is not overstated.
• EBITDAEarnings before interest, taxes, depreciation and amortization: a measure of operating profit that leaves out financing costs, tax and non-cash asset costs.
• assetSomething a business owns or controls that is expected to bring future economic benefit, such as cash, receivables, stock, machinery or software.

This word in other fields

The same English word can have a different meaning in another field:

• depreciation · International Trade
• depreciation · Real Estate
• depreciation · Economics
• depreciation · Finance & Banking

More terms: Assets, Liabilities & Equity

• liability
• equity
• current asset
• current liability
• retained earnings
• inventory
• accrued expense
• prepaid expense
• deferred revenue
• provision
• write off
• intangible asset