Depreciate

Depreciate is a verb with several related meanings. In general use, it means to lessen or reduce in value, importance, or esteem. The related noun depreciation refers to the decrease in value itself or to the accounting process by which the cost of an asset is allocated over its useful life.

In accounting and finance, depreciation is the systematic allocation of an asset’s cost over its useful life. It reduces reported earnings and the asset’s book value on the balance sheet, but it does not reflect an immediate cash outlay. Common methods include straight-line depreciation, which spreads cost evenly over years; declining-balance depreciation, which accelerates expense in early years; and units-of-production depreciation, tied to the asset’s usage. Depreciation also has tax implications, as depreciation deductions can lower taxable income. The asset’s book value typically declines over time until it reaches its salvage value or zero.

In economics and finance more broadly, depreciation can describe a decrease in the value of currencies or other financial instruments, or the wearing out and obsolescence that cause asset prices to fall.

In everyday language, to depreciate something or someone is to belittle or devalue it. The term emphasizes reduced worth or esteem rather than a formal accounting process. The noun depreciation and the adjective depreciated are used in various contexts to describe diminished value or significance.