Which term refers to cost recovery in accounting?

The term that refers to cost recovery in accounting is accounting depreciation. This process is crucial because it allows businesses to allocate the cost of tangible assets over their useful lives, reflecting the consumption of the asset's economic benefits.

Accounting depreciation serves multiple functions: it helps to match expenses with revenues over time, providing a more accurate picture of a company's financial performance. Through depreciation, businesses can recoup the costs associated with their assets gradually, which impacts their tax obligations as well. Different methods, such as straight-line or declining balance, can be used to determine the depreciation expense, each providing a slightly different representation of how an asset's value diminishes over time.

Other terms mentioned, such as financial depreciation and market valuation, do not accurately capture the systematic allocation of an asset's cost as it relates to accounting principles. Financial depreciation may refer to similar concepts but is not standard terminology like accounting depreciation, while asset disposal pertains to the sale or removal of an asset from the balance sheet rather than the ongoing cost recovery process. Market valuation relates to determining an asset's current value in the marketplace, which is distinct from operational depreciation within financial reporting.