The reduction in value of a physical asset. Physical assets such as property, plant and equipment, with the exception of land, are depreciated annually to reflect the wear and tear of an asset. Assets are depreciated using a variety of methods, over the estimated useful life of an asset. Accumulated depreciation represents how much of an asset’s value has been used since the time it was originally purchased. Amortization and depreciation are often used interchangeably, but this is inaccurate because amortization refers to intangible assets, while depreciation refers to tangible assets.