Asked by Vivian Ramirez on Jun 14, 2024
Verified
Depreciation, from an accounting viewpoint, can best be thought of as:
A) accounting for the physical deterioration of an asset.
B) writing off assets like patents, trademarks, and copyrights.
C) matching the carrying value of the asset with the estimated net realizable value of the asset.
D) allocating the cost of the asset to the periods in which it gives service.
Depreciation
Depreciation is the accounting process of allocating the cost of tangible assets over their useful lives, representing how assets lose value over time.
Carrying Value
The book value of assets and liabilities recorded in the financial statements, often differing from the market value.
Net Realizable Value
The estimated selling price in the ordinary course of business minus the costs of completion, disposal, and transportation.
- Gain insight into the theories and implementations of depreciation, including its documentation in accounts and the consequent effect on fiscal health and cash turnover.
Verified Answer
BB
Bukky BakareJun 18, 2024
Final Answer :
D
Explanation :
Depreciation is the process of allocating the cost of a tangible asset over its useful life. It does not account for physical deterioration, as this is covered under repairs and maintenance expenses. Writing off assets like patents, trademarks, and copyrights is not depreciation, but rather amortization. Matching the carrying value of an asset with the estimated net realizable value of the asset is related to impairments, which are treated separately from depreciation. Therefore, choice D - allocating the cost of the asset to the periods in which it gives service - is the best option for the accounting viewpoint of depreciation.
Learning Objectives
- Gain insight into the theories and implementations of depreciation, including its documentation in accounts and the consequent effect on fiscal health and cash turnover.