In this final paper, the term and the role of depreciation are explained. In the paper, the definition of depreciation and its basic features are specifically described. The ways in which depreciation and amortization can be observed are stated and explained as well as the factors that are significant for the final cost of amortization of tangible and intangible assets. The place of depreciation in the account plan is shown in the paper with its division into the account groups, synthetic accounts and analytic accounts. Certain assets are depreciated (amortized) and others are not; the assets that are depreciated are the subject to the calculation of depreciation costs. The useful economic life of the asset is an essential element for the calculation of depreciation costs. There are several methods of depreciation, some are used more frequently and some less. The biggest emphasis is put on the linear method as the most commonly used depreciation method, which is also used by the company Mali Ivica d.o.o. which is used in the paper as an example for explaining the procedure of the depreciation of assets. The basic information about the company as well as the division of assets, explanation of income and expenses and the calculation of depreciation costs are presented in this paper.