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Depreciation Category

Depreciation represents the systematic allocation of the cost of tangible assets over their useful lives, reflecting their wear and tear, obsolescence, and usage decline. It enables businesses to match asset expenses with the revenue generated, ensuring accurate financial reporting and compliance with accounting standards such as GAAP and IFRS. Common depreciation methods include straight-line, declining balance, and units of production, each providing distinct impacts on financial statements and tax obligations. Understanding depreciation is essential for asset management, tax planning, and evaluating long-term investment decisions.