Depreciation is an essential accounting concept that allows the gradual allocation of the cost of a fixed asset over its useful life. It reflects the loss of value of an asset due to physical wear and tear, technological obsolescence, or the passage of time. There are three main methods: straight-line depreciation (equal charges each year), declining balance depreciation (higher charges at the beginning, gradually decreasing), and units-of-production depreciation (charges based on actual usage). Depreciation ensures a faithful presentation of a company’s financial results and helps anticipate the renewal of investments, thereby contributing to optimal strategic management of resources.
