Depreciation is a decrease in the value of an asset over time due to wear and tear, obsolescence, or other factors. In the context of finance and economics, depreciation is an accounting method used to spread out the cost of an asset over its useful life. This allows businesses and individuals to allocate the cost of the asset to the periods in which it is used, rather than expensing the entire cost in the period of acquisition. Depreciation is often recorded on financial statements and used in tax calculations.