Match these terms with their correct definition.
-The process of allocating the cost of a tangible fixed asset to expense over the asset's useful life
A)Book value
B)Cost
C)Depletion
D)Depreciable cost
E)Depreciation
F)Impairment
G)Involuntary disposal
H)Residual value

Question

Quizplus · Accepted Answer

Depreciation is the process of allocating the cost of a tangible fixed asset to expense over the asset's useful life.

Answer: B
 Cost refers to the original purchase price of the asset.

Answer: C
 Depletion is the process of allocating the cost of natural resources to expense over the period of extraction or use.

Answer: D
 Depreciable cost refers to the portion of the asset's cost that can be depreciated over its useful life. This excludes any residual value.

Answer: F
 Impairment refers to a permanent decrease in the value of an asset. This may require a write-down of the asset's value on the balance sheet.

Answer: G
 Involuntary disposal refers to the loss of an asset due to factors outside of the company's control, such as theft or natural disaster.

Answer: H
 Residual value refers to the estimated value of an asset at the end of its useful life. This is used in calculating depreciation expense.

Match These Terms with Their Correct Definition