Accumulated Depreciation: What It Is, How It Works, and Why It Matters for Investors
Warren Team
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Key terms
- Depreciation (Business)An accounting method that allocates the cost of a tangible asset over its useful life, reflecting the gradual wear, tear, and obsolescence of the asset over time. Depreciation is recorded as an expense on the income statement and reduces taxable income, providing a tax benefit even though it does not involve an actual cash outflow. Common assets that are depreciated include equipment, vehicles, buildings, and machinery.
- Room and BoardThe combined cost of housing and meal plans at a college or university, which is a significant portion of the overall cost of attendance. Room and board costs vary depending on whether you live on campus, off campus, or at home, and the type of meal plan you select. Many colleges require first-year students to live on campus and purchase a meal plan.
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