Depreciation

In, depreciation refers to two aspects of the same concept:
 * The decrease in value of ( depreciation)
 * The allocation of the cost of assets to periods in which the assets are used (depreciation with the )

Depreciation is a method of reallocating the cost of a tangible asset over its useful life span of it being in motion. Businesses depreciate long-term assets for both accounting and tax purposes. The former affects the balance sheet of a business or entity, and the latter affects the net income that they report. Generally the cost is allocated, as depreciation, among the periods in which the asset is expected to be used. Methods of computing depreciation, and the periods over which assets are depreciated, may vary between asset types within the same business and may vary for tax purposes. These may be specified by law or accounting standards, which may vary by country. There are several standard methods of computing depreciation expense, including fixed percentage, straight line, and declining balance methods. Depreciation expense generally begins when the asset is placed in service. For example, a depreciation expense of 100 per year for five years may be recognized for an asset costing 500. Depreciation has been defined as the diminution in the utility or value of an asset. Depreciation is a non cash expense. It does not result in any cash outflow. Causes of depreciation are natural wear and tear.

Depreciation expense does not require current outlay of cash. However, since depreciation is an expense to the P&L account, provided the enterprise is operating in a manner that covers its expenses (e.g. operating at a profit) depreciation is a source of cash in a statement of cash flows, which generally offsets the cash cost of acquiring new assets required to continue operations when existing assets reach the end of their useful lives.

Amortization
Amortisation (or amortization; see) is paying off an amount owed over time by making planned, incremental payments of and. To amortise a loan means "to kill it off". In accounting, amortisation refers to charging or writing off an 's cost as an over its estimated useful life to reduce a company's taxable income.