Allocating and Recording the Cost of Using Property, Plant

question 7

Multiple Choice

Allocating and recording the cost of using property, plant & equipment over their useful lives is called

• A) allocation expense.
• B) depreciation expense.
• C) a general expense.
• D) amortization expense.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired, representing the loss of value over time.

Residual Value

The estimated amount that an asset will realize upon its sale at the end of its useful life.

Straight-Line Depreciation

A method of accounting in which an asset's cost is evenly distributed over its useful life to represent its consumption.

Depreciable Cost

The total cost of an asset that is subject to depreciation over its useful life, excluding any salvage value.