We learnt about depreciation but i'm still lost what it means...
and what's salvage value?
pls help!!

Depreciation is when the value of an investment declines, for example if you buy a car for $20000.00 and after a year it depreciates to $18000.00 then it has depreciated by 10%.

Depreciation is not in reality the decline in the value of an asset overtime, it is a business expense to cover the wear and decline in useful value of an asset so that it can be charged to year fiscal period that caused the wear and value decline. Depreciation is he term used in financial statements for this expense under GAAP. Government tax laws often use other names for it like capital cost allowance, but it means the same thing.

An example will help; my business buys a machine for $12,000. It has at the present use level a five year life span, after which it is worth $2,000 (it slavage value), thus over the five years it depreciates $10,000. In it simplest form depreciation is often taken in the straight line method, which simply means evenly throughout the five years. Thus the annual depreciation of the machine $10,000/5yrs=$2,000/yr. I won't confuse you with the rest of the ways to depreciate an asset.

I hope that helps you understand what it is? If you need to now more just ask.

In short, it's the amount your capital ivestment declines by.
Say for example you bought an office for 1000 and know it's going to last for 50 years, thus if you use linear depreciation it means the value of your office goes down by 20 a year.

Depreciation has two meanings. The general meaning of depreciation is, as stated correctly above by theoracleonline, the decline of the value of a tangible asset over a period of time.

There is a second meaning of depreciation, which is the more strict accounting definition... Depreciation is an accounting entry that is used to reconcile a firm's cash position to the book value position of the firm's assets on financial statements. For instance, a firm purchases an asset (a machine?) for 10K. The firm immediately takes a 10K hit to its cash position to make the purchase. HOWEVER, under GAAP accounting rules, the firm, on its cost accounting books, does not need to REALIZE this 10K loss all at once. It can take the 10K expense and, in effect, time phase it over the useful life of the purchased asset using "Depreciation/Amortization" accounting entries.

As for Salvage Value, lets say that 10K piece of equipment has a useful life of five years. After the five years are up, all of the incremental "Depreciation" hits have been recorded. At this point, the asset has a value of zero on the company's books. Despite the accounting showing the asset being worthless, or "fully depreciated", it might still have some incremental value left if the company decided to sell it. This is called "salvage value".