what is depreciation of products
Depreciation Accounting Depreciation is defined as the reduction in the value of a product arising from the passage of time due to use or abuse, wear and tear. Depreciation is not a method of valuation but of cost allocation. This cost allocation can be based on a number of factors, but it is always related to the estimated period of time the product can generate revenues for the company (economic life). Depreciation expense is the amount of cost allocation within an accounting period.