What is notional depreciation?

Notional depreciation refers to the theoretical reduction in the value of an asset over time, based on accounting principles rather than actual market conditions. It typically reflects the wear and tear, obsolescence, or age-related decline of an asset's value, calculated for financial reporting purposes. This depreciation is "notional" because it may not correlate with the asset's market value or its selling price. It is primarily used for understanding financial performance and tax implications rather than for actual cash flow.