Depreciation (nolietojums)

Depreciation (nolietojums) is the gradual write-off of the initial cost of a fixed asset to expense over its useful life, calculated every year and shown in the profit or loss account.

The Law on Annual Statements and Consolidated Annual Statements treats depreciation as a value adjustment: fixed assets are depreciated each year, while intangible assets are written down each year, which Latvians often call amortisation.

Land is not depreciated because its useful life is unlimited. The company sets its depreciation method in its accounting policy and keeps using it from year to year.

Depreciation is charged whether the year ends in profit or loss. If an asset is revalued, later depreciation is based on the revalued amount.