Wear and tear

Wear and tear is the normal degradation of an asset from ongoing usage, even when it is being properly maintained. Wear and tear gradually reduces the value of an asset. This decline in value is represented in the accounting records by the depreciation associated with an asset.

Wear and tear is not caused by unusual levels of neglect or abuse; when these conditions are present, an asset can be expected to decline in value at a much faster rate than normal.

The concept is commonly included in warranty clauses in contracts, where the manufacturer declares that a loss in value due to normal wear and tear will not be covered.

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Fixed Asset Accounting