Difference between Depreciation and Capital Loss
Depreciation and capital loss are two different concepts in accounting. Depreciation is the term used to describe the reduction in the value of an asset as a result of factors such as wear and tear, obsolescence, or other similar reasons, over a period of time. It is a non-cash expense that record on the income statement and reduces the value of the asset on the balance sheet.
Depreciation used to spread the cost of an asset over its useful life. Capital loss, on the other hand, is the loss incurred when an asset is sold for less than its purchase price. It a realize loss and record on the income statement as a separate line item. Capital losses can use to offset capital gains for tax purposes.
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In summary, depreciation is a non-cash expense that reduces the value of an asset over time. While capital loss is a realized loss incurred when an asset is sold for less than its purchase price.
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