Answer:
The consumption of capital in the production process.
Explanation:
Depreciation can be defined as the decrease of the recorded cost of a fixed asset in a systematic way until the value of the asset becomes zero or negligible.
Depreciation is referred to as 'consumption of physical capital'. It is the difference that exists between gross investment and net investment.
Examples of fixed assets include: buildings, furniture, office equipment, machinery. A land is the only oddity. A land cannot be depreciated as the value of land appreciates with time.
