Is depreciation an irrelevant cost

Depreciation is generally considered a relevant cost for financial reporting and tax purposes, as it affects a company's profit and tax liabilities. However, in decision-making contexts, such as evaluating new projects or investments, it can be viewed as an irrelevant cost since it does not represent a cash outflow. Instead, decision-makers often focus on future cash flows that will be incurred. Therefore, while depreciation has implications for accounting, its relevance varies depending on the context of the analysis.