What is the primary purpose of calculating depreciation?

What is the primary purpose of calculating depreciation?

Step 1: Understand that depreciation is a way to account for the decrease in value of an asset over time.
Step 2: Recognize that businesses use assets (like equipment or buildings) to help them earn money.
Step 3: Realize that as these assets are used, they lose value, which is an expense for the business.
Step 4: Know that by calculating depreciation, a business can show this expense on their financial statements.
Step 5: Understand that showing this expense helps lower the amount of profit that is taxed, which means the business pays less in taxes.

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