Where an entity exists in a rapidly changing environment, depreciation of a non-current asset will:
A) show the consumption of economic benefits during a given period.
B) ensure operating capacity is maintained.
C) provide sufficient funds to replace the asset.
D) be inappropriate.

Question

Quizplus · Accepted Answer

Depreciation reflects the consumption of economic benefits of a non-current asset over its useful life, regardless of the environment's pace of change. It's an accounting process to allocate the cost of tangible assets over their useful lives, not directly related to maintaining operating capacity, funding replacement, or being inappropriate due to environmental changes.

Where an Entity Exists in a Rapidly Changing Environment, Depreciation