The cost of a tangible asset is allocated over time.What is systematic allocation designed to reflect?
A) The recognition of some form of unpredictable event that modifies the value of the asset
B) An ongoing process of consumption.
C) An unusual loss in value.
D) None of these

Question

Quizplus · Accepted Answer

Systematic allocation is designed to reflect an ongoing process of consumption, where the cost of a tangible asset is spread out over its useful life. This helps to accurately represent the economic benefit received from the asset over time. Option A is not correct as systematic allocation is not related to unpredictable events. Option C is not correct as systematic allocation deals with normal wear and tear and not unusual loss in value. Option D is not correct as one of the options A, B, or C must be correct.

The Cost of a Tangible Asset Is Allocated Over Time