Depletion

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Description of Depletion. Explanation.

 

Definition Depletion. Description.


Depletion is an accounting treatment to deal with the reduction in the value of natural, non-renewable resources due to gradually "using up" the natural resource. Example of such natural resources include oil, gas, coal, gold, other minerals and timber.


The recording of depletion is a bookkeeping entry similar to depreciation and does not involve the expenditure of cash. As a non-cash expense it is deducted from revenues and thus lowers net income.


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Compare with: Depreciation  |  Amortization  |  Factor Endowments

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