Asked by Shaquille Clarke on Jul 04, 2024
Verified
Depreciation is a process of
A) determining the asset's fair value.
B) asset valuation.
C) cost allocation.
D) determining the asset's residual value.
Depreciation
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting its wear and tear, obsolescence, or decline in value over time.
Cost Allocation
The process of identifying, aggregating, and assigning costs to cost objects, such as products, services, or departments.
Residual Value
Residual value is the estimated amount that an asset will be worth at the end of its useful life, reflecting its expected salvage value.
- Comprehend the fundamental concepts of asset depreciation and its effects on financial reports.
Verified Answer
MB
Myranda BurtonJul 06, 2024
Final Answer :
C
Explanation :
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. It is not about determining fair or residual value, nor is it a method of valuing an asset in the market.
Learning Objectives
- Comprehend the fundamental concepts of asset depreciation and its effects on financial reports.