What is the term for the reduction value of an asset over time?

The term for the reduction value of an asset over time is depreciation. This accounting method is used to allocate the cost of a tangible asset over its useful life. As assets age or are used, their value decreases due to wear and tear, obsolescence, or market conditions. Depreciation helps businesses account for this loss in value on their financial statements, reflecting a more accurate picture of their financial health and ensuring they allocate sufficient resources for asset replacement or maintenance.

Amortization, while also a method of allocation over time, specifically refers to the process of paying off intangible assets or loans, rather than the reduction in value of tangible assets. Appreciation denotes an increase in the value of an asset over time, which is contrary to the concept of depreciation. Valuation simply refers to determining the current worth of an asset or a company, without inherently considering the time-related reduction in value.