Concept: Depreciation means the gradual decrease in the worth of a fixed asset over its useful life.
Explanation: Fixed assets such as machinery, vehicles, and equipment lose value with constant use.
This fall in value is caused by wear and tear, obsolescence, or the passage of time.
Depreciation is recorded in financial statements to show the true reduced value of the asset.
It is not an appropriation of profit, because an appropriation distributes profit after it is earned.
It is also not the estimated life of an asset, which is the period the asset is expected to serve the business.
Lastly, depreciation does not increase asset value; rather, it reflects a decline in that value.
Hence, depreciation is simply the loss in the value of a fixed asset.
Answer: C. loss in the value of a fixed asset