What is the term used to describe the reduction in value of office equipment over time?

The term used to describe the reduction in value of office equipment over time is depreciation. Depreciation is the accounting method that allocates the cost of a tangible asset over its useful life. This process reflects the wear and tear, decline in utility, and eventual obsolescence of the equipment. Depreciation is crucial for accurate financial reporting, as it helps in matching expenses with revenues in the periods when the assets are used. This ensures that a company’s financial statements provide a realistic view of its financial condition.

The other terms presented relate to different financial concepts. Amortization typically refers to the process of gradually writing off the initial cost of an intangible asset, such as patents or copyrights, over a set period. Appreciation refers to the increase in the value of an asset over time, which is the opposite of depreciation. Valuation is the process of determining the current worth of an asset or a company, not specifically tied to the reduction of value over time.