What is depreciation related to a capitalized fixed asset?

Depreciation is a term used in accounting to spread the cost of an asset over the span of the assets “expected life”.  Depreciation reduces the value of the asset over time due to its use, wear and tear, or obsolescence.  The University uses the straight line method for machinery and equipment and calculates the annual depreciation expense for each asset by taking the asset cost minus any salvage value and dividing it by the useful life in years.