What are depreciation and appreciation, and can you provide examples?

Question

Accepted Answer

Depreciation is the decrease in value of an asset over time, while appreciation is the increase in value of an asset over time.

Depreciation is a method used to allocate the cost of a tangible asset over its useful life.
Appreciation is the increase in value of an asset due to factors such as market demand or improvements made to the asset.
Example of depreciation: A company purchases a delivery truck for $50,000 and estimates its useful life to be 5 years. Using straight-line depreciation, the truck's value decreases by $10,000 each year.
Example of appreciation: A real estate property purchased for $200,000 increases in value to $250,000 due to renovations and improvements made to the property.

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