Introduction to Depreciation

Depreciation occurs when the value of assets decreases over time, like furniture or technology. An example could be when the brand new iPhone 14 is released, and after a couple of years with the iPhone 20, the 14 is no longer new or worth the price you purchased it for. Depreciation happens because it’s no longer in good condition after being used and worn out. Acknowledging this expense is important so you aren’t over-calculating your assets and have an accurate net worth.