To summarize:

1. Depreciation is the process of converting the cost of an asset into expense over its service life.

2. This process recognizes that an asset gradually loses its usefulness.

3. An asset can lose its usefulness for either of two reasons:

a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. The asset’s service life is the [longer / shorter] of these two causes.