Depreciation on the whole, is stated to represent the attempt to allocate an assets initial cost over its useful lifecycle. Financial managers attempt to match annual expenses of plant and equipment ownership against produced revenues.
A corporation may purchase a fleet of vehicles for business use. Over a number of year, the vehicles would depreciate in value and this loss must be accounted for in the company's financial statements. In reflecting this loss, the company gives shareholders an accurate portrayal of the economic health of the business. …
