🏦Long-term assets are recorded at initial cost on the balance sheet and then expensed over time through depreciation.
📉Depreciation represents the decline in usefulness, functionality, and value of the asset.
💰Depreciation transfers the cost of the asset to an expense account over its useful life.
⏳Properly depreciating an asset requires information about the initial cost, expected useful life, and residual value.
📝There are three common depreciation methods: straight-line, units of activity, and double declining balance.