Question

The main objective of providing depreciation is to ___________.

• A. create secret reserves
• B. reduce the book value of assets
• C. value the assets properly
• D. allocate cost of the assets

Answer 1

The correct option is D allocate cost of the assets

It is necessary to distribute the cost of a fixed asset, less the scrap or salvage value after the useful life of the asset is over, in such a way so as to allocate it as equitably as possible to the periods during which the benefits are received from the use of fixed assets. This system of procedure is called depreciation accounting.