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depreciation business definition
- The periodic cost assigned for the reduction in usefulness and value of a long-term tangible asset. Because firms can use several types of depreciation, the amount of depreciation recorded on corporate financial statements may or may not be a good indication of an asset's reduction in value. Depreciation not only affects the asset's value as stated on the balance sheet, it also affects the amount of reported earnings. Also called expense. See also Accelerated Cost Recovery System, accelerated depreciation, accumulated depreciation, recapture of depreciation 1, straight-line depreciation.
- A decline in the value of a currency in relation to other currencies. For example, the dollar may suffer depreciation against the euro, meaning that more dollars are required to purchase a given amount of euros.
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