Depreciation

Depreciation is an estimate of the decrease in the value of an asset, caused by "wear and tear", obsolescence, or impairment. The use of depreciation affects a company's (or an individual's) financial statements, and, in some countries, their taxes.

Related Topics:
Asset - Wear and tear - Obsolescence - Impairment - Financial statement - Tax

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In economics, depreciation is the decrease in value of the capital stock (physical depreciation). Depreciation is caused mainly by deterioration, or wear and tear of equipment, and obsolescence. If capital stock is C_0 at the beginning of a period, investment is I and depreciation D, the capital stock at the end of the period, C_1, is C_0 + I - D.

Related Topics:
Economics - Capital stock

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