Question

The balance in the Accumulated Depreciation account represents the:

a) cash fund to be used to replace plant assets

b) amount to be deducted from the cost of the plant asset to arrive at its fair market value

c) amount charged to expense in the current period

d) amount charged to expense since the acquisition of the plant asset

*** PLEASE EXPLAIN WHY THAT IS THE ANSWER!

Answer 1

D) amount charged to expense since the acquisition of the plant asset

Accumulated depreciation refers to the cummulative depreciation of an asset upto a single point in its life.

The carrying value of asset in the balance sheet will be difference between its purchase price and Accumulated depreciation

Accumulated depreciation will be relevant for the assets which have been capitalized

Operating assets are expensed when they are purchased

Since capitalized assets provides the value which is greater than a year , and accounting rule which states that expenses and sales are matched in a year in which they are incurred

A process was called depreciation was made.

It is the part of cost of asset in the year when it is purchased and for rest of useful life

Accumulated depreciation is the total that the asset has been depreciated over the assets life