Which of the following most appropriately describes depreciation?
A)Decline in value of a plant asset
B)Gradual allocation of the cost of a plant asset over periods of usefulness
C)Physical deterioration of a plant asset
D)Gradual obsolescence of a plant asset

Question

Quizplus · Accepted Answer

Depreciation is the gradual allocation of the cost of a plant asset over periods of usefulness. It represents the decline in the value of the asset due to wear and tear, physical deterioration, and technological advancements that make the asset obsolete. However, only option B accurately describes the accounting treatment of depreciation, which is to spread the cost of an asset over its useful life, rather than to record the actual decline in value.

Which of the Following Most Appropriately Describes Depreciation