Depreciation is closely allied to the repairs, renewals, improvements, and wear and tear, which have already been considered. While repairs represent the re-establishment of a diminished value arising from use, depreciation represents a shrinkage in the value beyond that which can be re-established by mere repairs.

Another characteristic feature of depreciation, and one which prevents it from being a proper offset to any appreciation of values, is the fact that it represents what has gone and is already lost, whereas appreciation is a thing hoped for - believed in, but not yet realized. "A charge for depreciation has no relation to profits, and must be made whether profit is being made or not; or, to express it in other words, the true theory of depreciation requires the replacement of the continuous waste of capital assets by the capitalization of an equivalent amount of revenue."*