Depreciation Explained

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Depreciation

What is Depreciation?

Depreciation is the gradual reduction in the value of tangible fixed assets over their useful life.

Explanation

Depreciation allows businesses to:

Spread the cost of assets over time
Match expenses with revenue generation
Gain potential tax benefits

Common methods include:

Straight-line depreciation
Declining balance depreciation

Practical Example of Depreciation

A business buys machinery for £10,000 and depreciates it over five years, recording £2,000 as a depreciation expense each year.

How Bizcap Can Help:
Need to upgrade or replace depreciating assets? Bizcap’s equipment financing options help maintain operational efficiency without draining cash reserves.

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