Depreciation is an accounting measure.........That can create a loss and affect earnings per share - am I not correct? Any CPAs out there who can correct me if I am wrong? I have run companies that were showing losses from tax purposes and we were actually profitable. Banks as an example - even though quite profitable in most cases can change their earnings picture by just taking a smaller or larger allowance for potential losses for bad debt. Assets can be depreciated down to next to nothing but once they are sold off depreciation must be recaptured as far as I know. I believe it is called straight line depreciation and you have a choice to write off less if you want to than the maximum amount.