Expert: Arthur Naman - 8/13/2009

Question
What do you mean by provision for depreciation?

Answer
Each year (or normal accounting period) depreciation expense is recorded and offset with the accumulated depreciation account. Technically the depreciation expense is not an "expense" because there is no cash outlay.

The annual depreciation is an estimate of the actual decrease in value as measured only when the asset is disposed. It is a means to allocate the decrease in value over the accounting periods when the asset is in use.

So, this is my definition of the concept of "provision" for depreciation.