Question

All of the following are true about depreciation expense except:

The amount of the expense is based on interest rates.

It is a non-cash expense.

Land cannot be depreciated.

It is related to the usable life of a capital asset.

Answer 1

Depreciation expense is nothing but apportioned portion of the Company fixed assets for the accounting period in which the asset is used. Generally, Depreciation is charged over the life of the asset and is matched with the revenue it generates during different accounting periods. Only assets which looses its value over its life is depreciated. Since land does not looses its value it does not gets depreciated. Cash is not Involved in depreciation as it generally a charge.

Thus,

All of the following are true about depreciation expense except:

The amount of the expense is based on interest rates.

Depreciation is not related to interest in any way.