Depreciation

Depreciation expense refers to the allocation of the cost of a long-term asset over its useful life.

Straight-line depreciation is a method where the cost of an asset minus its salvage value is evenly distributed over its useful life, resulting in equal depreciation expenses each year.

• ! COGS includes Depreciation.

We don't include the full price of a fixed asset under Operating Expenses. Its cost is spread over the years the asset will be used and recorded as depreciation.