5260 Depreciation

Depreciation is the depletion of the cost of Capital Assets; it reflects the loss in value of capital assets over the years. In order to account for the reduction in value and usefulness of tangible property, the agency expenses a portion of the cost as depreciation each year of the asset's life. The agency reports the amount depreciated during the reporting period as an operating expense/reconciling item. Typically, as a non-cash expenditure, the agency reports depreciation as Funds Not Applied. Agencies choose their own depreciation method provided that the depreciation value is measured in a systematic and rational manner.

Agencies also report the cost of writing off property damaged beyond repair that do not qualify as extraordinary and special items in this object class.