Depreciation is the process of
A) valuing an asset at its fair value.
B) increasing the value of an asset over its useful life in a rational and systematic manner.
C) allocating the cost of an asset to expense over its useful life in a rational and systematic manner.
D) writing down an asset to its real value each accounting period.

Question

Quizplus · Accepted Answer

Depreciation is the process of allocating the cost of an asset to expense over its useful life in a rational and systematic manner. This is done because assets lose value over time due to wear and tear or obsolescence, so it is necessary to spread their cost out over their expected useful life rather than recording the entire cost as an expense in the period of acquisition.

Depreciation Is the Process of