What is the systematic write-off of the value of a tangible asset over its useful life?

The systematic write-off of the value of a tangible asset over its useful life is known as depreciation. This accounting process allocates the cost of the asset over its estimated useful life, reflecting the asset's consumption, wear and tear, or obsolescence. Depreciation helps businesses match expenses with revenues and provides a more accurate representation of an asset's current value on financial statements. Common methods of depreciation include straight-line, declining balance, and units of production.