What is depreciation?

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November 30, 2012
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What is depreciation?

It so happened that one word can be used in various fields where its common essence is preserved. Variations of specific definitions are due to the direction of a particular field.

Depreciation: Definition

Today we will talk about depreciation as a whole, and what this concept means in different areas: in technical, economic areas.

The translation of the word amortization is associated with values ​​such as "redemption", "easing", "easing". Let's see how this concept can be used, what is depreciation in various fields.

Amortization in the field of technology

Here, depreciation is a certain degree of absorption of shocks, their mitigation in technical means: vehicles, aircraft, railway transport, etc.

A special device - a shock absorber - is used, for example, to absorb shocks when landing aircraft or when driving on an uneven road in a car.

Depreciation in the economy

Depreciation of fixed assets in the course of their use, production use, calculated in cash equivalent.

Here, depreciation acts simultaneously as a process, and as a means, and as a way of transferring the value of worn out tools of labor to the product produced with their help.

Depreciation of fixed assets is reimbursed by depreciation, presented in the form of money. They are sent to the construction, manufacture and repair of new fixed assets.

Depreciation deductions are included in the cost of production, that is, the amount of deductions is determined by the cost of production of this product and is included in the price.

The manufacturer of the product must accumulate depreciation from the revenue received during the sale of the product. Such savings form a depreciation fund representing funds specifically designated for the restoration of fixed assets worn out during production.

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