Depreciation
/dɪˌpriːʃiˈeɪʃən/
Definitions
The decrease in value of an asset, such as property, plant, or equipment, due to wear and tear, obsolescence, or market conditions.
/dɪˌpriːʃiˈeɪʃən/
A reduction in the value of an asset over time.
The accountant calculated the annual depreciation of the building.
💡 Simply: Imagine your awesome new phone. The second you walk out of the store, it's worth a little less. That slow decrease in value over time, as technology gets better and your phone gets older, is called depreciation.
👶 For kids: When something gets old and less useful, like a toy that breaks, we say its value goes down. That's kind of like depreciation!
More Examples
A rapid depreciation in the value of the currency hurt its international trade.
The depreciation of the car's value was substantial after five years of use.
How It's Used
"The company recorded a significant depreciation expense for its aging equipment."
"Understanding depreciation is crucial for calculating accurate asset values on a balance sheet."
"Rapid depreciation of the currency led to increased inflation."
Synonyms & Antonyms
Antonyms
From Late Latin *depretiatio* ('a lowering of price, value'), from the verb *depretiare* ('to lower the price of, depreciate'), from *de-* ('down, away') + *pretium* ('price').
Depreciation has been a key concept in accounting and economics since the industrial revolution, as companies needed a way to accurately account for the diminishing value of their machinery and equipment.
Memory tip
Think of an old car. Its value goes DOWN (de-) as it gets used. That's depreciation!
Word Origin
"to lower the price of"