Accounting Dictionary

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Depreciation

Definition: Depreciation is the gradual charging to expense of an asset's cost over its expected useful life. For example, a $3,000 computer is estimated to have a three-year useful life, so you should charge $1,000 of depreciation expense against the computer asset per year. If there is a significant amount of expected salvage value at the end of an asset's useful life, then you should reduce the amount of depreciation accordingly.