Which statement best describes the nature of accounting depreciation?

Question

Quizplus · Accepted Answer

Accounting depreciation is the process of allocating the cost of a long-term asset (such as a building or equipment) over its estimated useful life. This allocation is taken as an expense in each accounting period in order to recognize the use of the asset and its gradual decline in value over time. Option A is incorrect because accounting depreciation is not tied to changes in market value, but rather to the asset's useful life. Option C is incorrect because while depreciation may impact tax deductions, it is not the definition of depreciation itself. Option D is incorrect because accounting depreciation is based on the cost of the asset, not its current replacement value.

Which Statement Best Describes the Nature of Accounting Depreciation