Depreciation definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. The term depreciation can be defined as: Expense created by allocating the cost of plant and equipment to periods in which they are used; represents the expense of using the asset. Depreciation is the expense related to the use of fixed assets, fixed assets being put on the books as assets and then depreciated over their useful like allowing the reader to see the cost as well as the accumulated depreciation and the book value. Most basic calculation of depreciation, straight line depreciation, takes the costs less salvage value divided by useful life. Depreciation journal entry includes a debit to depreciation expense and a credit to accumulated depreciation, depreciation expense increased expenses and lowering net income, accumulated depreciation decreasing total assets and the book value.
