Depreciation is the diminution in value of an asset over a period of time due to obsolescence, wear and tear due to usage, passage of time etc. The determination of the amount an asset has depreciated (over a given period of time) is often through assessing its useful life and dividing its purchase value by its useful life. The resulting amount is the depreciation for that period of time.

Another way is by obtaining a valuation of the asset at the end of a given period. The difference between this assessed value and its valuation at the beginning of the period is ‘depreciation’.

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