Meaning & Definition of word "Depreciation"

Depreciation

/dɪˌpriː.ʃiˈeɪ.ʃən/

noun:

  • 1. A reduction in the value of an asset over time, typically due to wear and tear.
    • Example: The depreciation of the equipment was calculated to be 20% per year.
  • 2. A decrease in the purchasing power of money, often due to inflation.
    • Example: The constant inflation led to significant depreciation of the currency.
  • 3. The accounting method of allocating the cost of a tangible asset over its useful life.
    • Example: The company uses straight-line depreciation to report its assets.

Etymology

From Latin 'depretiatio', meaning 'a lowering in value'.

Common Phrases and Expressions

depreciation schedule:

A table or documentation that outlines the depreciation expense of an asset over time.

accumulated depreciation:

The total depreciation expense that has been deducted from an asset's value since it was acquired.

book value:

The value of an asset as recorded on the balance sheet, after depreciation.

Related Words

devalue:

To reduce or underestimate the worth or importance of something.

amortization:

The process of paying off a debt over time through regular payments.

Slang Meanings of depreciation

Meaning: Value drop

Example Sentence: That old phone has a total value drop after a year.

Meaning: Asset shrinkage

Example Sentence: The asset shrinkage on those machines was worse than expected.