Which term describes the decrease in value of fixed assets over time?

The term that describes the decrease in value of fixed assets over time is depreciation. Depreciation reflects the gradual reduction in the value of tangible fixed assets, such as buildings, machinery, and equipment, as they age and are used in operations. This decrease in value is an important concept in accounting, as it helps businesses allocate the cost of an asset over its useful life, which in turn affects profit reporting and tax calculations.

Amortization, while similar, specifically refers to the gradual write-off of intangible assets, such as patents or copyrights, rather than fixed assets. Obsolescence indicates a situation where an asset loses value due to becoming outdated or out of style, rather than simply aging or being used. Appreciation, on the other hand, describes an increase in the value of an asset over time, which is contrary to the concept of depreciation. Thus, depreciation is the appropriate term for the decrease in value of fixed assets.