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 trad 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 th systematic and rational manner to those periods expected to benefit from the use of the asset. For example, a company like Goody a decine in their foir value. Instead, it depreciates assets through systematic charges to expense. This spproach 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. A are dificult to measure objectively. Therefore, Goodyear charges the asset's cost to depreciation expense over its estimated life. It makes no attem cost allocation approach because it recognizes the expense in the periods expected to benefit from the use of the asset and because fluctuations in f When companies write off the cost of long-lived assets over a number of periods, they typically use the term depreciation. They use the term der and coal) over a period of time. The expiration of intangible assets, such is patents or copyrights, is called amortization (discussed in Chapter i2 Factore Involved in the Depreciation Process Defore establishing a pattern of chargen to revenue, a company must answer three basic questions: 1. What depreciable base is to be used for the asset? a. What is the asset's usefullife? 3. What method of cost apportionment is best for this asset