The balance in the Accumulated Depreciation account represents the
A)cash fund to be used to replace assets.
B)amount to be deducted from the cost of the asset to arrive at its fair value.
C)amount charged to depreciation expense in the current period.
D)amount charged to depreciation expense since the acquisition of the asset.

Question

Quizplus · Accepted Answer

The balance in the Accumulated Depreciation account represents the total amount charged to depreciation expense since the acquisition of the asset. This account is used to accumulate the depreciation charges over the life of the asset, and the balance of the account represents the total amount of depreciation incurred to date. As such, it is used to reduce the asset's book value to its current fair value. Options A and C are incorrect because the Accumulated Depreciation account does not represent cash and is not related to the current period's depreciation expense. Option B is incorrect because the fair value of the asset is determined by market forces and not by deducting the accumulated depreciation from the asset's cost.

The Balance in the Accumulated Depreciation Account Represents the