Is depreciation expense or loss?

Depreciation expense or loss

 Depreciation is considered an expense in accounting, but it is not the same as a loss.

In accounting, depreciation is the process of allocating the cost of a long-term asset over its useful life. It is an expense that represents the reduction in the value of the asset over time due to wear and tear, obsolescence, or other factors.

Depreciation is recorde in the income statement as an expense, and it reduces the net income of the business.

A loss, on the other hand, is a reduction in the value of an asset or an increase in liabilities that results in a decrease in the equity of the business. Losses can occur due to events such as theft, fire, or natural disasters, or they can result from the sale of an asset for less than its book value.

While depreciation is an expense that reduces the net income of the business, it does not result in a loss of equity. Instead, it reflects the decrease in the value of a long-term asset over time, and it is an important factor in determining the true profitability of the business.

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