Depreciation spreads the cost of something long-lived — a van, a machine, a computer — across the years you use it, rather than counting the whole cost in the month you bought it.
Why it exists
Because a fifty-thousand-dollar van is not a fifty-thousand-dollar expense in March. It is an asset you will use for years, and counting it all at once would make March look catastrophic and the following three years look better than they are.
Spreading it means each year carries a share of the cost, which is a truer picture of what the business earns.
Why it confuses owners
Two things, and both are worth having straight.
The cash left when you bought it, and the expense arrives over years. This is one of the clearest cases where profit and cash diverge — you can have a poor cash month and a good profit month for exactly this reason. See cash and accrual.
A loan payment is not depreciation. Buying a van on finance produces both: depreciation on the van, and interest on the loan. The capital portion of the payment is neither — it is repaying borrowed money. Treating the whole payment as an expense while also depreciating the van counts the same cost twice.
Where it appears
The asset sits on your balance sheet and reduces each year. The depreciation charge appears on your profit and loss as an expense.
What to do about it
Very little, day to day. It is your accountant's decision how anything is depreciated, and the rules vary by region and by what the item is.
What is worth doing is recording purchase dates and costs when you buy equipment, in devices or wherever you keep the record, so the conversation with your accountant takes ten minutes rather than an afternoon of receipts.