Question

In a lump-sum purchase of assets, the cost must be allocated to the individual assets because:______

Answer 1

In a lump-sum purchase of assets, the cost must be allocated to the individual assets because every individual asset has a different useful life and different depreciation rate. Depreciation is the methodical distribution of an asset's depreciable value over the course of its useful life.

The cost of an asset, or another quantity substituted for cost, less its residual value, is its depreciable amount. Depreciation can take many different forms, including  the accelerated and the straight-line depreciation.

An accountant records depreciation for all the capitalized assets that have not yet been fully depreciated at the conclusion of an accounting period.

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