Depreciation is the process of
A) valuing an asset at its fair market 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 to match the expense of the asset with the revenue generated by the asset over its useful life. Option A is incorrect because fair market value is not necessarily related to depreciation. Option B is incorrect because the value of an asset typically decreases over its useful life, not increases. Option D is incorrect because an asset is not necessarily written down every accounting period.

Depreciation Is the Process of