The cost of using a fixed asset (such as a building or a machine) over its useful life. It takes into account how much the asset wears out, becomes outdated, or loses value over time. It also considers how much the asset could be sold for at the end of its life. Depreciation expense is only for tangible assets that are part of property, plant, and equipment (PP&E). It does not include intangible assets (such as patents or trademarks) or assets that are not owned by the company (such as leased assets or leasehold improvements). Depreciation expense reduces the earnings of the company and the value of the asset on the balance sheet. It is a noncash expense, meaning it does not involve paying cash. To find out how much depreciation expense is recorded for a period, look at the income statement. If depreciation expense is not shown separately from amortization of intangibles, look at the cash flow statement instead. Depreciation expense does not include any losses from selling or disposing of an asset before its useful life is over. It also does not include any changes in value due to changes in ownership or exchange rates.