Depreciation Expense Calculation is the accounting method used to allocate the cost of a tangible asset over its lifetime. It’s an important practice for businesses, as it allows them to spread out their costs and recognize revenue sooner. By calculating depreciation expenses on assets like equipment, buildings, and furniture, businesses can account for the value of an item as it loses value over time. This helps businesses maintain accurate financial statements and tax liabilities while providing clarity on expected returns. Depreciation expense calculations can help businesses properly plan for future investments, assess the effectiveness of capital expenditures, and provide guidance regarding asset replacement decisions.