What is the primary purpose of depreciation accounting for a depreciable non-current asset?
Correct answer: A. To allocate its depreciable amount over its useful life
- A. To allocate its depreciable amount over its useful life
- B. To record its replacement cost at each year-end
- C. To estimate its selling price at the reporting date
- D. To accumulate cash for purchasing a new asset
Explanation
Depreciation systematically allocates the asset's depreciable amount over the periods that receive its benefits. It is not a process of setting aside cash or directly measuring current market value.
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About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
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33 free Depreciation and Non-Current Assets MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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