The purpose of depreciation is to:
A) allocate cost in order to measure profit.
B) track value changes in the assets.
C) measure the current value of assets in the balance sheet.
D) record the fair value of the asset.

Question

Quizplus · Accepted Answer

The purpose of depreciation is to allocate the cost of an asset over its useful life in order to measure the profit earned by the business. It is not meant to measure the current value of assets or record the fair value of the asset. While it does track changes in the value of the asset, this is not the primary purpose of depreciation.

The Purpose of Depreciation Is To