For simplicity, imagine a balance sheet with constant/no current assets and current liabilities in time. An investor buys equipment worth 1000 dollars, thus raising the fixed assets to 1000 in the assets section, and the owners' equity to 1000 in the liabilities and owners' equity section. Next year, due to depreciation, the fixed asset will lose value on the balance sheet in the total assets section. What will happen now to the liabilities and owners' equity section, which should always be equal to the total assets? It seems like the equity can't lose value, because the initial investment is still the same, which would mean the liabilities and owners' equity is suddenly bigger than the assets?