Definition — What is  Depreciation?

Depreciation is the systematic reduction of the recorded cost of a fixed asset. In business accounting, depreciation is a method used to allocate the cost of a purchased asset over a period of time, the asset is expected to be of use until the value of the asset becomes zero or negligible.

Example of Depreciation: Let's assume that a business purchases a Computer with a cost of $10,000 and it is expected to be used for 5 years because every time you access it, the components inside it get used up a little bit, and improved technology will eventually make it obsolete.  If we also assume that the computer will have no salvage value, the company will record a depreciation expense of $10,000 over the five years. So the annual depreciation expense will be $2,000. (The amounts can vary depending on the depreciation method and assumptions.)

Almost everything we see around us has a useful life and will become outdated as technology changes or will get worn out gradually based on its usage. You can depreciate both tangible and intangible items. The most types of tangible property in business such as IT assets like ( computers, data centers, switches, servers, etc ), furniture, buildings, vehicles, etc. Certain intangible property that can be deprecated are software, patents, copyrights, trademarks, technologies, company brand name, etc.  

What are the tyes of deprecations?