Depreciation Expense

Depreciation expense is recognized in accounting to represent the cost of using an asset over a period. It is a non-cash expense that reduces the value of an asset due to factors like wear and tear, age, or obsolescence. This expense is used in accounting to match the cost of an asset to the revenue it generates each accounting period, following the matching principle. There are various methods for calculating depreciation, such as straight-line, reducing balance, and units of production, each appropriate for different types of assets and usage patterns.