Depreciation. Depreciation brings together both an economic reality and an accounting principle. Some things last for a long time, some last for less time. The time they last and can function economically is the economic life of the thing. The cost when the thing is new is the acquisition cost, but the cost or using this thing in any period is the acquisition cost divided by its economic life.

Depreciation in business accounting. In general, depreciation is use throughout business accounting.

The starting point of economic life is common ... but there are substantial instances where tax law has intervened to change the economics of investment ... and many instances where depreciation accounting is driven by tax considerations more than by economic, accounting and technical realities.

Depreciation is also accounted for incorrectly from the economic and technical perspective when the asset base is used for calculation of the maximum allowable pricing of products and services ... this eventually ruined the old AT&T (Ma Bell telephone company) ... and is doing something similar in the FORGOTTEN THE EXAMPLE FOR THE MOMENT!