The purpose of depreciation is to
A)Recognize the reduced usefulness of an asset.
B)Adjust the ledger account balances for assets to equate to their current market value.
C)Adjust the carrying value of an asset to market value.
D)Measure the change in an asset's value.
E)Allocate the asset's cost to the periods benefiting from its use.

Question

Quizplus · Accepted Answer

The purpose of depreciation is to allocate the cost of an asset to the periods in which it provides benefits to the company's operations. It is not intended to adjust the ledger account balances to market value or measure the change in an asset's value. While depreciation does recognize the reduced usefulness of an asset, this is not the primary purpose.

The Purpose of Depreciation Is to