Depreciation is not a process of valuing assets

Question

Quizplus · Accepted Answer

Depreciation is the process of allocating the cost of a tangible asset over its useful life, not valuing the asset. Valuation refers to determining the current worth or market value of an asset, which may be affected by factors such as supply and demand, economic conditions, and asset-specific characteristics. Depreciation plays a role in calculating the book value of an asset or determining its tax basis, but it does not provide a comprehensive picture of its overall value or worth.

Depreciation Is Not a Process of Valuing Assets