 Hello, in this lecture, we're going to talk about the definition of depreciation. According to fundamental accounting principles, while 22nd edition, the definition of depreciation is expense created by allocating the cost of plants and equipment to periods in which they are used represents the expense of using assets. Key point here are we talking about assets, those assets being property, plants and equipment, depreciable assets. And we need to know when we should expense those assets, when should we recognize the expense of the use of those assets. The answer being according to the matching principle that we should expense when the assets have been consumed. So as we're using the assets, we are expensing those and we're allocating the cost over the useful life. Let's take a look at an example. If we bought something like the forklift here for the 15,000, we put the 15,000 on as property plants and equipment and assets, not an expense, because we have not yet consumed it in accordance with the matching principle, it should be an asset. If we then estimate that the useful life is five years for that forklift, if we divide the 15 by the five, we say that we are basically using or consuming 3,000 of it per year. So that 3,000 is the depreciation expense that we would have per year allocating the cost of 15 over the five year period, the useful life. If we look at a trial balance here, we're talking about the 15 would be on as in the asset when we purchase the forklift. And then we can expense that in this case, we expense 3,000 in the first year. And we don't want to get the expense mixed up with the accumulated depreciation, the accumulated depreciation being a contra asset account. This represents where we stand at the end of the term time period, accumulated depreciation being the total of the expenses that have accumulated over the life so far. As opposed to depreciation expense, you'll note that it's less, it's only got one year's worth in it, representing that certain time periods worth of expense that has been allocated for that particular time frame.