Depreciation-A Method of Cost Allocation LEARNING OBJECTIVE 1 Describe depreciation concepts and methods of depreciation. Most individuals at one time or another purchase and trade in an automobile. The automobile dealer and the buyer typically discuss what the trade will be in several years. In both cases, a decline in value is considered to be an example of depreciation. To accountants, however, depreciation is not a matter of valuation. Rather, depreciation is a means of cost allocation. Depreciation is the systematic and rational manner to those periods expected to benefit from the use of the asset. For example, a company like Goody a decline in their fair value. Instead, it depreciates assets through systematic charges to expense. This approach is employed because the value of the asset may fluctuate between the time the asset is purchased and the time it is sold or junked. At are difficult to measure objectively. Therefore, Goodyear charges the asset's cost to depreciation expense over its estimated lif