What is depreciation?

What is depreciation?
Depreciation is an allowance or provision made in the financial records of a business or association for "wear and tear" and "technical obsolescence "on plant and equipment. The idea of depreciation is to spread the cost of that capital asset over the period of its "useful life to the entity" that currently owns it. If the full cost of the asset were to be borne in the year that it was purchased, then that year's expenditure would be unfairly penalised whilst expenditure during the remaining years, which were still receiving the benefit from the asset, would not be affected.
What does it apply to and for how long?
Depreciation relates to capital assets shown on a Balance Sheet as Non-Current Assets. These assets are purchased to be used by the association and are generally not for resale. e.g. a filing cabinet, a photocopier, a microfiche reader, a computer, office chairs, tables. Most of these would come under the heading of Office Furniture and Equipment.
However each item of furniture and equipment may not last as long as another. It may wear out, prove inadequate or become technically obsolete.
Therefore when considering the question of depreciation, the "useful life" to the association of each depreciable asset should be estimated and the "depreciable amount" ( i. the historical cost less the net amount expected to be recovered on the disposal of that asset at the end of its useful life based on today's values and not some time in the future) should be calculated.
A computer may last six to ten years but it is highly probable that the maximum "useful life" for depreciation purposes might be regarded as three to five years due to the incredible advance in computer technology rendering it "out-of -date" (obsolescent) - to be relegated to some minor use, sold, part exchanged or just 'dumped' due to it being too costly to repair/maintain. As an example: if the computer cost $3000, was expected to be replaced after four years with a greater capacity machine with additional features and could be expected to sell for $400 at the end of the four years - the useful life would be four years and the depreciable amount would be "$3000 less the residual value $400=$2600"