Depreciation Reserve Legal Meaning and Definition

Here is a simplified definition of the legal term Depreciation Reserve.

Depreciation Reserve (noun):

A financial reserve or fund that a business or company gradually builds up over the lifespan of an asset. It's designed to collect enough money so that when the asset is fully depreciated (meaning its value has been decreased, usually due to wear and tear) and becomes obsolete, the business can afford to replace it. This reserve acts as a financial cushion for the business.