Asked by Andrea Diaz-Rodriguez on Jul 11, 2024
Verified
Depreciation is the process of allocating the cost of a plant asset over its service life in
A) an equal and equitable manner.
B) an accelerated and accurate manner.
C) a systematic and rational manner.
D) a conservative market-based manner.
Plant Asset
Long-lived tangible assets used in the production and distribution of goods and services, such as machinery and equipment.
Systematic
Methodical in procedure or plan; carried out using step-by-step methods leading to predictable outcomes.
Service Life
The estimated period over which a fixed asset is expected to be usable by the entity, impacting its depreciation calculation.
- Understand the concept and purpose of depreciation in accounting.
Verified Answer
CP
Connie PinedaJul 14, 2024
Final Answer :
C
Explanation :
Depreciation is the process of allocating the cost of a plant asset over its service life in a systematic and rational manner to reflect the asset's decline in value over time. This is typically done through methods such as straight-line, declining balance, or units of production. Option A is incorrect because not all assets may have an equal and equitable allocation method. Option B is incorrect because not all assets may be accurately depreciated at an accelerated rate. Option D is incorrect because depreciation is not based on market values but rather the useful life and salvage value of the asset.
Learning Objectives
- Understand the concept and purpose of depreciation in accounting.