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Simple English definitions for legal terms
depreciable asset
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A quick definition of depreciable asset:
A depreciable asset is something that a person or business owns that helps them make money and lasts for more than a year. Over time, the value of the asset goes down and the owner can get some money back for this loss. This is allowed by the government's tax rules.
A more thorough explanation:
A depreciable asset is a type of physical asset that is used for generating income or profit and has a useful life of more than a year. Over time, the value of the asset gradually reduces, and it is eligible for depreciation treatment under tax laws in accordance with the Internal Revenue Service rules.
For example, a company purchases a delivery truck for $50,000. The truck is expected to last for five years and will be used for delivering goods to customers. The company can claim compensation for the loss in the value of the truck over the five-year period, which is known as depreciation.
Another example is a manufacturing plant that is used for producing goods. The plant has a useful life of 20 years, and the company can claim depreciation on the plant over the 20-year period.
These examples illustrate how depreciable assets are used for generating income or profit and have a useful life of more than a year. They also show how the value of the asset gradually reduces over time, making it eligible for depreciation treatment under tax laws.