Depreciation expense:
A) allocates a portion of the cost of an asset against the revenue the asset helps earn each period.
B) is not required for plant assets according to GAAP.
C) is reported on the balance sheet.
D) is required for land according to GAAP.

Question

Quizplus · Accepted Answer

Depreciation expense is a method of allocating the cost of a long-term asset over its useful life to match the revenue or benefit of the asset to the period it was used, as per generally accepted accounting principles (GAAP). Therefore, option A is the correct choice. Option B is incorrect because depreciation is required for plant assets. Option C is also incorrect as depreciation expense is reported on the income statement, whereas the accumulated depreciation is reported on the balance sheet. Option D is incorrect because land is not subject to depreciation under GAAP.

Depreciation Expense