What is depreciation?

Depreciation is the decrease in the value of an asset over time as a result of wear and tear.

For a business, depreciation of an asset is an expense and is recorded as such for accounting purposes.

Individuals may claim depreciation back on personal assets used for work purposes.

How does depreciation work?

The two basic methods for depreciation in accounting are:

  1. straight-line method
  2. diminishing-value method

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