An accounting construct which is the measure of the wearing out, consumption or other reduction in the useful economic life (being the life over which the owner of an asset will derive economic benefits from its use) of a tangible fixed asset, whether arising from use, effluxion of time or obsolescence through technological or market changes. Where this applies to intangible long-term assets, it is referred to as amortisation.

For more information, see Practice note, Demystifying company accounts: Depreciation, amortisation and impairment.