Which of the following best describes the objective of depreciation?
A)To allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue.
B)To estimate the remaining useful life of the asset.
C)To report the asset on the balance sheet at the estimated amount for which the asset could be sold on the balance sheet date.
D)To estimate the current market value of the asset.

Question

Quizplus · Accepted Answer

The objective of depreciation is to allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue. This is done to match the cost of the asset with the revenue it generates over its useful life. Depreciation is not used to estimate the remaining useful life, report the asset on the balance sheet at the estimated amount for which the asset could be sold on the balance sheet date, or estimate the current market value of the asset.

Which of the Following Best Describes the Objective of Depreciation