Depreciation refers to a reduction in the value of any asset over time, due in particular to wear and tear or getting old. In accounting terms, depreciation is outlined as the reduction or decreasing of the recorded value of a particular asset in a very systematic manner until the worth of the asset becomes zero or negligible. Examples of some fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation permits some of the value of a particular asset to the revenue generated by the fixed asset. This is necessary because of the matching principle as revenues are recorded with their associated expenses within the accounting amount once the asset is in use. This can be referred to as an accelerated depreciation method. As the name explains, it is counted as an expense twice as much as the book value of the asset every year.

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