Depreciation

Depreciation allocates the cost of tangible assets over their useful life, reflecting how physical
assets lose value through use over time.
Why it matters:
Depreciation smooths financial performance and ensures asset costs are reflected fairly across
reporting periods.
Practical use:
Hotels depreciate furniture, kitchen equipment, and technical infrastructure over several years.
Real-life examples:
A hotel that renovates rooms depreciates the investment over 10 years instead of showing a
sharp profit drop in the renovation year.