Glossary
Depreciation
Depreciation spreads the cost of a tangible asset over the periods it is used, rather than expensing it when bought. The accounting figure reflects management's estimate of useful life and residual value. The tax figure does not: Canada replaces it with capital cost allowance, computed on the CRA's classes and rates. Because the two follow different rules, nearly every corporate return reconciles accounting depreciation out and capital cost allowance in.
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