When technology is changing rapidly, depreciation of an asset will help maintain an entity's operating capacity.

Question

Quizplus · Accepted Answer

Depreciation is an accounting method for allocating the cost of a tangible asset over its useful life. It does not directly impact an entity's operating capacity but rather reflects the asset's consumption, wear and tear, or obsolescence over time. Rapid technological changes may render assets obsolete more quickly, but depreciation itself does not maintain or enhance an entity's operating capacity.

When Technology Is Changing Rapidly, Depreciation of an Asset Will