Depreciation is a process that happens to assets where value is reduced according to the duration of time because of the wear and tear of use. A car for example is an asset where the value of the car at the time of purchase will differ from the value of the car at the time of sale because the car has accumulated wear and tear over time.  The term is usually used in accounting to estimate the current value of the asset. However, depreciation also happens in an economic term as well where negative factors such as decreased market value,  low appraisal value, or bad reputation can reduce the asset’s value.