Hedge Fund Glossary

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Depreciation

in accounting, a method of allocating the acquisition cost of a tangible asset over the expected useful life of the asset by attributing portions of such cost to the periods during which the asset is being “used up” to earn revenues. Depreciation is not a method of valuation but rather of cost allocation. The Depreciation of an asset for accounting purposes is not necessarily a reflection of the asset’s current market value. In accounting speak, a tangible asset Depreciates over time whereas an intangible asset Amortizes. See Amortization.

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