Question

1 what is the ultimate purpose of long-term assets?

2 How should the cost of these assets be allocated over the asset's useful life?

3 Why is depreciation not synonymous with valuation?

Answer 1

Answer for 1)

The long term assets are assets which are not expected to be consumed in a single year.The ultimate purpose of long term assets is to produced some utility in long run either in operations or increase in value etc.

Answer for 2)

Depreciation for tangible and amortization is for intangible assets are process of allocation of costs over the assets useful life.In depreciation there are many ways like based on it's useful life or on production capacity etc where ultimate goal is to allocate it's cost over life of assets.

Answer for 3)

Depreciation is not a method of estimation of cost but method of cost allocation for the period.Hence,deprec deprec and valuation and synonymous.