Plant assets are depreciated because
A)the accrual basis of accounting requires matching of costs to revenues.
B)cash basis of accounting requires depreciation.
C)the book values equal market values.
D)the replacement cost of plant assets may fluctuate over time.

Question

Quizplus · Accepted Answer

Plant assets are depreciated because the accrual basis of accounting requires matching of costs to revenues. Depreciation is the process of allocating the cost of a plant asset over its useful life in a systematic and rational manner. This allows for an accurate matching of the cost of the asset with the revenue it generates over the years it is in use.

Plant Assets Are Depreciated Because