Depreciation

Last Updated: Jun 6, 2019

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Depreciation is a reduction in the value of an asset with the passage of time, due in particular to wear and tear. In terms of accounting, Depreciation is a method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. For tax purposes, businesses can deduct the cost of the tangible assets they purchase as business expenses; however, businesses must depreciate these assets in accordance with IRS rules about how and when the deduction may be taken.