Depreciation

The revenue-producing ability of a depreciable asset will decline due to wear and tear and to obsolescence.

True

The book value of a plant asset should approximate its fair value.

False

Depreciation applies to three classes of plant assets: land, buildings, and equipment.

False

Depreciation does not apply to a building because its usefulness and revenue-producing ability generally remain intact over time.

False

Depreciation expense and accumulated depreciation are reported on the income statement.

False

Four factors affect the computation of depreciation: cost, useful life, salvage value, and residual value.

False

Recognizing depreciation on an asset results in an accumulation of cash for replacement of the asset.

False

Depreciation is a process of asset valuation, not cost allocation.

True

Depreciation provides for the proper matching of expenses with revenues.

True

The balance in accumulated depreciation represents the total cost that has been charged to expense since placing the asset in service.

True