What is the definition of depreciation?

Depreciation refers to the systematic allocation of the cost of a tangible asset over its useful life. This accounting method matches the expense of using the asset with the revenue it generates over time, thereby providing a more accurate representation of the asset's contribution to the company's operations. By spreading the cost of an asset over its lifespan, businesses can better reflect the economic reality of wear and tear, obsolescence, and usage, effectively aligning expenses with the income produced by the asset.

The other options describe concepts that do not align with the definition of depreciation. For example, the gradual increase in the value of an asset pertains to appreciation, not depreciation. Similarly, the immediate write-off of an asset's cost refers to expensing the entire value of an asset at once, which contradicts the methodical allocation approach that defines depreciation. The total expected cash flow from an asset relates to valuation and return analysis rather than the cost allocation process that depreciation encompasses.