Lumacad, Rey Ryan E.

Depreciation refers to two aspects of the same concept:

1. the decrease in value of assets (fair value depreciation), and

2. the allocation of the cost of assets to periods in which the assets are used (depreciation
with the matching principle).
A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate
long-term assets for both tax and accounting purposes. The former affects the balance sheet of a
business or entity, and the latter affects the net income that they report. Generally the cost is
allocated, as depreciation expense, among the periods in which the asset is expected to be used.
This expense is recognized by businesses for financial reporting and tax purposes. Methods of
computing depreciation, and the periods over which assets are depreciated, may vary between
asset types within the same business and may vary for tax purposes. These may be specified by
law or accounting standards, which may vary by country. There are several standard methods of
computing depreciation expense, including fixed percentage, straight line, and declining balance
methods. Depreciation expense generally begins when the asset is placed in service. For
example, a depreciation expense of 100 per year for 5 years may be recognized for an asset
costing 500.

Economic value is a measure of the benefit provided by a good or service to an economic agent.

It is generally measured relative to units of currency, and the interpretation is therefore "what is
the maximum amount of money a specific actor is willing and able to pay for the good or
service"?

Market value or OMV (Open Market Valuation) is the price at which an asset would trade in a
competitive auction setting. Market value is often used interchangeably with open market
value, fair value or fair market value, although these terms have distinct definitions in different
standards, and may differ in some circumstances.

fair value is a rational and unbiased estimate of the potential market price of a good, service, or
asset. It takes into account such objective factors as: acquisition/production/distribution costs,
replacement costs, or costs of close substitutes.
book value is the value of an asset according to its balance sheet account balance. For assets, the
value is based on the original cost of the asset less any depreciation, amortization or impairment
costs made against the asset. Traditionally, a company's book value is its total assets
minus intangible assets and liabilities. the value of a security or asset as entered in a company's
books.

Salvage value is the estimated resale value of an asset at the end of its useful life. Salvage
value is subtracted from the cost of a fixed asset to determine the amount of the asset cost that
will be depreciated. Thus,salvage value is used as a component of the depreciation 

Scrap value is associated with the depreciation of assets used in a business. In this
situation, scrap value is defined as the expected or estimated value of the asset at the end of its
useful life.Scrap value is also referred to as an asset's salvage value or residualvalue.