Financial Terms Glossary

Depreciation

Formal

A decrease in the value of asset caused by wear-and-tear, technological obsolescence or time. The allowance or charge made to a company's profit and loss account, to reflect this change in value.

Informal

How do you appreciate depreciation? Imagine buying your dream car - the moment it moves off the forecourt then it's worth less than what you paid for it. That difference is depreciation - the loss in value of an item caused by time, use, or technical obsolescence.

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