Depreciation
Allocating the cost of a tangible long-lived asset over its useful life.
FAR tests this as a computation under a named method: the classic trap is double-declining balance, where you apply 2 × the straight-line rate to beginning-of-year net book value and ignore salvage until book value would fall below it (then stop at salvage). Watch for partial-year acquisitions (prorate) and for a change in estimate — revised life or salvage — applied prospectively: spread the remaining net book value over the remaining life; never restate prior years. A change in method is likewise handled prospectively as a change in estimate under ASC 250.
The tell separating this from its relatives: depreciation is the systematic, rational allocation that embodies the matching principle — it applies the principle, it is not the principle. Do not confuse it with impairment (ASC 360): an event-driven write-down of a held-and-used asset to fair value (only after it fails the recoverability test) that establishes a new cost basis; depreciation then continues on that lower base over the remaining life, with no reversal allowed. Land is never depreciated.
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