Video narration
Why does an ageing phone or laptop lose value without a new cash payment every year? Its cost is used up over time. Depreciation systematically allocates that cost over its useful life. Straight Line Method: annual depreciation equals (cost minus residual value) divided by useful life. Written Down Value Method: depreciation equals opening book value times the rate; closing book value equals opening book value minus depreciation. So, it lowers book value as an expense, not a separate payment.