Is Depreciation a Real Expense?

Depreciation is used on an income statement for almost every business. It is listed as an expense, and so should be used whenever an item is calculated for year-end tax purposes or to determine the validity of the item for liquidation purposes.

Is depreciation an actual expense?

Actual expenses include items such as depreciation, lease payments, maintenance, repairs, tires, gasoline, oil, insurance, and license and registration fees. Other vehicle-related expenses such as parking fees, tolls, interest, and state and local personal property taxes are treated as separate deductions.

Is depreciation not a real expense?

It is very real. Depreciation is a common expense shown in the financial statements and tax returns of businesses. The purpose of recording depreciation expense is to recognize the decline in value of an operating asset over time. An operating asset is something purchased for use in a business.