depreciation

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depreciation,

in accountingaccounting,
classification, analysis, and interpretation of the financial, or bookkeeping, records of an enterprise. The professional who supplies such services is known as an accountant. Auditing is an important branch of accounting.
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, reduction in the value of fixed or capital assets, as by use, damage, weathering, or obsolescence. It can be estimated according to a number of methods. In the straight-line method, depreciation is simply seen as a function of time; the cost of the asset, minus its value as scrap, is divided by an estimate of its life. Other methods distribute depreciation over the life of the asset by gradually increasing, or gradually diminishing, installments. The resale value of a machine generally declines most quickly during its early years; thus its depreciation is measured in decreasing installments. The opposite is true of rights of limited duration, such as copyrights and leaseholds, whose value depreciates most quickly as their date of expiration approaches. The technical name for the depreciation of such nonmaterial rights is amortization. The problem of calculating depreciation has special importance because of the need for accuracy in income tax returns. Failure to make allowance for depreciation results in overestimating income. Depreciation of money is brought about by a decline in the price of a particular currency in terms of other currencies, thereby lowering the foreign exchange value of the first currency.

Bibliography

See J. D. Coughlan, Depreciation (1969); R. P. Brief, ed., Depreciation and Capital Maintenance (1984).

Depreciation

The reduction in the value or worth of an asset, such as a building, through physical deterioration over time, and general obsolescence.

depreciation

[di‚prē·shē′ā·shən]
(industrial engineering)
Loss of value due to physical deterioration.

depreciation

Economics a decrease in the exchange value of currency against gold or other currencies brought about by excess supply of that currency under conditions of fluctuating exchange rates
References in periodicals archive ?
Accountants sometimes refer to depreciating assets, but this is generally a term to show how a particular item has fallen in value," Thomas explains.
Murray has finally conceded that van Bronckhorst won't sign a new contract and that effectively forces the club to sell what has become a depreciating asset.
The heart wants what the heart wants, they say, but aren't bankers the least bit nervous about this renewed love affair with depreciating assets we can't afford?
Such a loan can be secured against depreciating assets, although a greater level of security will be required.
Instead of purchasing such quickly depreciating assets, learn this four-letter word: Save.
In other words, the increase in will help to create more appreciating assets, than depreciating assets.
Reinvestment ratios suggested companies were reinvesting at a rate greater than they were depreciating assets.
manufacturers or retailers), because they are using truly depreciating assets in their businesses, while not receiving a current deduction (for taxable income or E&P) for their inventory.
The bottom line is that buyers are still not interested in buying depreciating assets and in any case have less money to do so whilst lending conditions remain tight and the inventory overhang is still huge," analysts from French investment bank Calyon said in a note to clients.
Dubai is also regarded as having good potential for acquisition with developers looking to turn depreciating assets into capital.