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For example, a depreciation expense of 100 per year for five years may be recognized for an asset costing 500.
Aditya Birla Fashion and Retail Ltd
In accountancy, depreciation refers to two aspects of the same concept: The decrease in value of assets (fair value depreciation) The allocation of the cost of assets to periods in which the assets are used (depreciation with the matching principle) Depreciation is a method of reallocating the cost of a tangible asset over its useful life span of it being in motion.
The former affects the balance sheet of a business or entity, and the latter affects the net income that they report.
GQ - Wikipedia
Businesses depreciate long-term assets for both tax and accounting purposes.
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