Final answer:
Depreciation, depletion, and amortization are implicit costs for using up fixed assets, natural resources, and intangible assets, respectively. These costs are recorded as non-cash expenses on the income statement and reduce the book value of assets on the balance sheet over time.
Step-by-step explanation:
Depreciation, depletion, and amortization are types of implicit costs associated with the gradual consumption of an asset's value. Depreciation applies to the allocation of the cost of tangible assets over their useful lives, depletion is similar but specific to natural resources, and amortization pertains to the spreading out of the cost of intangible assets over their expected useful life.
These costs are included in the financial statements of a business, typically on the income statement as non-cash expenses that reduce taxable income. They are also reflected in the decrease of the asset's book value on the balance sheet over time. Although these expenses do not involve an immediate outflow of cash, they represent the using up of assets which is an opportunity cost for the firm.