Depreciation
dih-pree-shee-AY-shun
/dɪˌpriːʃiˈeɪʃən/
A reduction in the value of an asset over time.
Can refer to the natural decline in value of an asset (like a car) due to wear and tear, or a decrease in the value of a currency relative to another.
The story behind the word. The word 'depreciation' combines the Latin prefix 'de-' (meaning 'down' or 'away') with 'pretium' (meaning 'price' or 'value'). So, to 'depreciate' literally means 'to lower the price' or 'to take value away.' It perfectly captures the idea of something losing its worth, whether naturally or in the market.
Word relationships
- decline: More general, can refer to any downward trend.
- reduction: Broader, refers to any decrease in amount or size.
- appreciation: An increase in the value of an asset over time.
- revaluation: A deliberate upward adjustment of a country's currency value by its government.
Commonly confused with
- Devaluation: Depreciation is a market-driven fall in currency value; devaluation is a deliberate policy decision by a government.
Word family
- depreciate (verb): to decrease in value over time.
Collocations
- currency depreciation
- asset depreciation
- annual depreciation
- rapid depreciation
- accelerated depreciation
Example sentences
- "The depreciation of the company's machinery was recorded in the financial statements as an expense." Discussing asset management.
- "A significant depreciation of the local currency can make imported goods much more expensive." Analyzing currency trends.
Memory hook
When something DEPRECIATES, its 'PRICE' (pretium) goes 'DOWN' (de-). Think of a car losing value the moment you drive it 'DE' (off) the lot. Value down
When not to use
Do not use 'depreciation' for a deliberate government action to lower currency value; 'devaluation' is the correct term for that.
Fun facts
- In accounting, depreciation is a method of allocating the cost of a tangible asset over its useful life.
Related words
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