Depreciation Legal Meaning and Definition

Here is a simplified definition of the legal term Depreciation.

Depreciation (noun)

Depreciation is the decrease in value of an asset (like a car or building) over time due to use, wear and tear, or technological obsolescence. It's often considered during tax calculations, as businesses can use the depreciation of assets to reduce their income tax. The amount taken each year may be spread over the asset's lifespan or at a faster rate earlier on. This doesn't mean the asset can't increase in value due to other factors like inflation, it's just a reflection of its physical or technological wear.