Depreciation

What is it? An accounting procedure that spreads the assets purchase cost over its depreciable life. (For example, a fixed asset that cost $10,000 and lasted 10 years could be depreciated by $1,000 a year for 10 years. For accounting purposes, this reduces its value by $1,000 each year, until, at the end of its useful life, it is worth nothing.) Depreciation reduces taxable income but does not reduce cash.

Added By: Brayden

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