What is Depreciation Cost?
Depreciation cost or simply depreciation, is the reduction in value of a fixed asset due to wear and tear.
Most fixed assets have a limited life, the exception being land, and therefore depreciate over time. An estimate of this depreciation cost is charged to the profit and loss account each accounting period and represents an expense of the business.
For further information on Depreciation Cost see the Wikipedia definition.
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About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.