Depreciation expense is used to:

Question

Quizplus · Accepted Answer

Depreciation expense is used to allocate the historical cost of an asset over its useful life. It represents the cost of the asset that has been used up or consumed during the period, and it helps to match this cost against the revenue generated by the asset. Option A is incorrect because depreciation expense is not used to allocate costs to departments; that is the role of cost allocation methods. Option B is incorrect because depreciation expense does not determine when an asset is fully paid off; that is determined by the payment schedule for the asset. Option D is incorrect because depreciation expense does not equate historical cost and market values of an asset; that is the role of impairment testing.

Depreciation Expense Is Used To