Depreciation in accounting refers to the systematic allocation of the cost of a tangible fixed asset over its useful life. This process recognizes the wear and tear, aging, and obsolescence of assets such as machinery, vehicles, and buildings. By spreading the expense over time, businesses can match costs with revenue generated by the asset, providing a more accurate financial picture. Various methods, such as straight-line and declining balance, are used to calculate depreciation, depending on the asset’s nature and usage.