Depreciation is the process of allocating the cost of property, plant and equipment over its estimated useful life, rather than expensing the entire cost in the year of purchase. It does not measure market value, physical deterioration or cause obsolescence directly, though these may be factors in determining the estimated useful life of an asset.

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Depreciation

Question 93

Multiple Choice

Depreciation:

A) Measures the decline in market value of an asset.
B) Measures physical deterioration of an asset.
C) Is the process of allocating to expense the cost of property,plant and equipment.
D) Is a cause of obsolescence.
E) All of these answers are correct.

Correct Answer: