Definition: Depreciation of fixed capital

Category: Tourism

According to the Glossary on services statistics depreciation is an "accounting recognition of an asset's loss in value due to wear and tear, age, obsolescence etc. Since this loss of value is difficult to measure, depreciation usually involves distributing the value of normally depreciable goods over a period corresponding to their probable useful life. This distribution taken the form of an amortisation plan, which may be calculated in various ways".
The measurement of the changes in this cost element (fixed capital) is achieved indirectly by measuring the changes in prices of goods and services contributing to fixed capital formation.