Depreciation is the process of deducting a portion of an asset’s value each year over its lifespan. This annual reduction in value is known as annual depreciation, and it helps companies manage their long-term costs and keep their balance sheets up-to-date. Companies may depreciate assets for many reasons, including expected wear and tear, changes in technology, and economic obsolescence. Annual depreciation allows business owners to take deductions from their taxable income, helping them offset their expenses while adhering to governmental regulations. By understanding the ins and outs of annual depreciation and how it works within a business setting, you can maximize your cost savings.