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Depreciation Meaning: Definition, Examples, and Translations

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depreciation

[dษชหŒpriหสƒiหˆeษชสƒษ™n ]

Definitions

Context #1 | Noun

accounting

A reduction in the value of an asset over time, usually due to wear and tear or obsolescence.

Synonyms

decrease, devaluation, diminution.

Examples of usage

  • The company's financial statements showed a significant depreciation in the value of its machinery.
  • The depreciation of the building was calculated at 2% per year.
Context #2 | Noun

economics

A decline in the value of a currency in relation to other currencies.

Synonyms

devaluation, fall, weakening.

Examples of usage

  • The depreciation of the local currency led to an increase in the cost of imported goods.
  • The government implemented measures to prevent further depreciation of the currency.
Context #3 | Noun

general

A decrease or loss in value, quality, or importance.

Synonyms

decline, devaluation, diminishment.

Examples of usage

  • The depreciation of his reputation was a result of the scandal.
  • The depreciation of the company's stock price was a cause for concern.

Translations

To see the translation, please select a language from the options available.

Interesting Facts

Economics

  • Depreciation affects businesses by lowering the value of assets like equipment, impacting taxes and accounting practices.
  • There are various methods to calculate depreciation, including straight-line, declining balance, and units of production.
  • It reflects the usage and aging of assets, which is crucial for maintaining accurate financial statements.

Psychology

  • People subconsciously associate new items with higher value; as time passes, their perceived value diminishes.
  • This psychological effect can lead to consumer behavior where individuals often desire the newest models regardless of the older item's condition.
  • Understanding depreciation can help people make smarter purchasing decisions, avoiding overvaluation of new products.

Practical Life

  • Car values drop significantly due to depreciation, which is why a new car can lose as much as 20% of its value in the first year.
  • Accurate knowledge of depreciation can help homeowners understand their propertyโ€™s value in economic terms, influencing investment decisions.
  • In technology, devices like smartphones depreciate rapidly because of fast-paced advancements and constant model releases.

Pop Culture

  • In movies featuring themes of money and investing, depreciation is often mentioned when characters discuss their fortune and assets.
  • Short films and educational shows have used depreciation as a plot point to teach financial literacy to children and teens.
  • The concept is parodied in comedic sketches where people joke about the loss of value in day-to-day items like fashion trends.

Origin of 'depreciation'

Main points about word origin

  • The term comes from the Latin word 'depretiare,' meaning to belittle or lower in price.
  • It was first used in the early 19th century, evolving within economic discussions about asset value.
  • Originally, the word had more to do with the emotional aspect of reducing worth or significance.

The term 'depreciation' has its roots in the Latin word 'depretiare', which means 'to lower in price'. The concept of depreciation has long been used in accounting and economics to reflect the decrease in value over time. In the context of assets, depreciation is a crucial aspect of financial reporting to accurately reflect the true value of an asset. In economics, currency depreciation can have significant effects on trade balances and inflation rates.

See also: depreciative, depreciatory.

Word Frequency Rank

With rank #4,500, this word represents useful upper-intermediate vocabulary. Understanding and using it will help you express more complex ideas effectively.