Depreciation Expense is an accounting term that describes the steady reduction in the value of an asset over time. It recognizes that as assets age, they become less useful. By allocating the cost of an asset over its useful life, businesses are able to spread out the impact on their books over multiple periods, while providing a more accurate depiction of a company’s financial health. Depreciation expense can also provide tangible tax advantages, allowing companies to write off the cost of the asset and potentially reduce their taxes by claiming the expense.