Question

Which of the following is not true regarding Depreciation? Group of answer choices Depreciation allocates the cost of a fixed asset over its estimated life. Depreciation expense reflects the decrease in market value each year. Depreciation is an allocation not a valuation method. Depreciation expense does not measure changes in market value.

Answer 1

Answer: Depreciation expense reflects the decrease in market value each year.

Explanation:

Depreciation is the decrease in the value of an asset due to the passage of time. Overtime, the value of machineries reduce as a result of usage. Depreciation is therefore the reduction in the value of assets. Depreciation is also the method used tin reallocating the cost of a tangible assets over its useful life span. Firms depreciate assets for accounting and tax purposes. The reduction in the value of an asset has am effect on the balance sheet of an entity.

The answer to the question is the second option. Depreciation does not have anything to do with the market value. Other options are correct except for the second option which states that depreciation expense reflects the decrease in market value each year.

Answer 2

Answer:

The correct answer is letter "B": Depreciation expense reflects the decrease in market value each year.

Explanation:

In accounting, depreciation expense is a noncash expense that represents the cost of a company's fixed assets that are being used given a period. Depreciation expense is added to the net income amount in the Cash Flows Statement and is mainly calculated using the straight-line method.

Thus, depreciation expense does not reflect the decrease in market value year after year.