#18 - Depreciation

Rule #18: “Never forget about depreciation.”

You can refuse the usefulness of this rule but you can never refuse the existence of depreciation expense.

Oftentimes depreciation expense takes up a significant portion of a cost that is being used. Here is an example related to car ownership.

It makes my hair move just looking at this graph. In other words, that is how depreciation deceitfully hides in cost.

Originally created and published in March 2010