deprektsioon

Deprektsioon is a term that can refer to several related concepts, primarily in the context of economics and accounting. In economics, it commonly refers to the depreciation of a currency relative to another currency. This means that a unit of the domestic currency can purchase fewer units of foreign currency than before. For example, if the US dollar depreciates against the Euro, it will take more dollars to buy one Euro. Currency depreciation can be caused by a variety of factors, including trade imbalances, changes in interest rates, political instability, and speculative attacks. It can make a country's exports cheaper for foreign buyers, potentially boosting trade, but it also makes imports more expensive, which can lead to inflation.

In accounting, depreciation refers to the systematic allocation of the cost of a tangible asset over its useful life. This accounting practice reflects the gradual wear and tear, obsolescence, or reduction in the utility of an asset. Instead of expensing the entire cost of an asset in the year it is purchased, companies spread that cost over several years. This matching principle ensures that the cost of using an asset is recognized in the same period as the revenue it helps to generate. Common methods of depreciation include straight-line depreciation, declining balance depreciation, and units of production depreciation. The choice of method can impact a company's reported profits and tax liabilities.