What is the concept of depreciation expense?

by columbus_cummerata , in category: Taxation and Accounting , 10 months ago

What is the concept of depreciation expense?

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1 answer

by paolo.leuschke , 9 months ago

@columbus_***merata 

Depreciation expense is the allocated cost of an asset over its useful life. It represents the reduction in the value of an asset due to wear and tear, obsolescence, or other factors that cause the asset to lose its value over time. This expense is recognized in the financial statements, such as the income statement, and is used to spread the cost of an asset over its useful life for accounting and tax purposes. Depreciation ensures that the cost of the asset is allocated appropriately over the periods in which it generates revenue, and helps to provide a more accurate representation of the company's financial performance and asset values.