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The asset is referred to as a depreciable asset. Depreciation expense generally begins when the asset is placed in service. For example, a depreciation expense of per year for five years may be recognized for an asset costing Depreciation is any method of allocating such net cost to those periods in which the organization is expected to benefit from use of the asset.

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Generally this involves four criteria: If an asset is expected aroma tropical shamanes online dating produce a benefit in future periods, some of these costs must be deferred rather than treated as a current expense. This expense is recognized by businesses for financial reporting and tax purposes. These may be specified by law or accounting standards, which may vary by country.

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Generally the cost is allocated, as depreciation expense, among the periods in which the asset is expected to be used. Depreciation is technically a method of allocation, not valuation,[3] even though it determines the value placed on the asset in the balance sheet.

There are several standard methods of computing depreciation expense, including fixed percentage, straight line, and declining balance methods.

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