Asked Jun 30, 2019
The purpose of the depreciation adjustment is to:
-spread the cost invested in an asset over its useful life.
-show the current market value of the asset.
-set up a reserve fund for purchasing a new asset.
-expense the full amount of the asset in the year purchased.

Expert Answer

Step 1

Depreciation: It refers to the diminution in the financial value of an asset over its useful life due to wear and tear or obsolescence.

Step 2


The main purpose of depreciation is to provide a method matching an asset’s original cost, opposing to the revenues that are created over its estimated useful life.

Step 3


The purpose of the depreciation adjustment is to spread the cost invested in...

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