Depreciation
A)assures that assets are reported at fair market value
B)is discretionary for many firms
C)allocates the cost of an asset over its useful life
D)is the responsibility of the department using the asset

Question

Quizplus · Accepted Answer

Depreciation is the process of allocating the cost of an asset over its useful life. This is done to match the cost of the asset against the revenue it produces over time. Depreciation is not discretionary for most firms and is a required accounting practice. It is also the responsibility of the accounting department, not the department using the asset. Depreciation does not necessarily assure that assets are reported at fair market value, as fair market value is dependent on market conditions and may differ from the asset's book value.