depreciation is the method through which the cost of equipment utilized in the business is recognizeddepreciation is the method through which the cost of equipment utilized in the business is recognizedAnswer & ExplanationYes, that's correct. Depreciation is an accounting method used to allocate th...
depreciation is the method through which the cost of equipment utilized in the
business is recognized
Answer & Explanation
Yes, that's correct. Depreciation is an accounting method used to allocate the
cost of a tangible asset over its useful life. This process allows businesses to
spread out the expense of an asset over several years, reflecting its consumption
and wear and tear.
Key Points about Depreciation:
1. Purpose: The main purpose of depreciation is to match the cost of using
an asset with the revenue it generates over time, adhering to the matching
principle in accounting.
2. Methods: There are several methods for calculating depreciation:
o Straight-Line Method: This method spreads the cost evenly
across each year of the asset's useful life.
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