Series 79: Depreciation, Amortization, And Depletion

Depreciation, Amortization, and Depletion

Depreciation is a method of accounting for the wear and tear of tangible assets with relatively long useful lifespans, such as equipment and machinery, computers, and furniture. For accounting purposes, the cost of such an asset is spread out over some period of time, which theoretically corresponds with the asset’s expected useful life. Each year, some percentage of the original cost of the item shows up as a depreciation expense. (The exact percentage depends on the depreciation period and method used.) Straight-line depreciation refers to an accounting method in which the cost of the