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Question

Depreciation is __________ of an asset.

A
Valuation
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B
Allocation
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C
Sale value
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D
All of the above
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Solution

The correct option is C Allocation
The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as Depreciation. Depreciation is any method of allocating such net cost to those periods in which the organization is expected to benefit from the use of the asset.
Thus, the correct option is B.

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