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2 April, 07:58

Which of the following most accurately reflects the concept of depreciation as used in accounting? (A) The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. (B) The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred. (C) An accounting concept that allocates the portion of an asset used up during the year to the contra-asset account for the purpose of properly recording the fair market value of tangible assets.

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  1. 2 April, 10:01
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    (A) The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.

    Explanation:

    Depreciation is a charge of expense as against the revenue earned from this asset. It is charged on tangible fixed assets, for the period getting financial benefit from such asset, this clearly demonstrates the accounting concept of matching all expenses against revenues.

    Therefore, most suitable statement reflecting accurately the cost of depreciation is

    (A) The process for allocation of cost for tangible fixed assets as expense in systematic manner for those periods expected to get benefit from use of the asset.
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