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Accounting charge for the decline in value of an asset spread over its economic life. Depreciation includes deterioration from use, age, and exposure to the elements, as well as decline in value caused by obsolescence, loss of usefulness, and the availability of newer and more efficient means of serving the same purpose. It does not include sudden losses caused by fire, accident, or disaster. Depreciation is often used in assessing the value of property (e.g., buildings, machinery) or other assets of limited life (e.g., a leasehold or copyright) for tax purposes. See alsodepletion allowance; investment credit.
This entry comes from Encyclopædia Britannica Concise. For the full entry on depreciation, visit Britannica.com.