Depreciation is a process by which
A) replacement funds are accumulated for plant and equipment.
B) the decline in market value of plant and equipment is determined and recorded.
C) the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset.
D) the difference between current market value and historical cost of plant and equipment.

Question

Quizplus · Accepted Answer

Depreciation is the process of allocating the cost of plant and equipment to expense over the time periods that benefit from the use of the asset. It is not related to accumulating replacement funds or determining the decline in market value of the asset. While the difference between current market value and historical cost may be relevant for determining impairment or disposal, it is not the primary purpose of depreciation.

Depreciation Is a Process by Which