Question

When depreciating property, the entire cost of the asset is deducted:

A. The first year it is acquired.

B. Over a period of years, rather than all at once.

C. The second year after it was acquired.

D. When it is no longer used in business.

Answer 1

Correct answer----------------(B) Over a period of years, rather than all at once.

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Depreciation expense is recorded and deducted as expense in income statement over the useful life of the asset. For example if a machine is expected to be used for 10 years then depreciation will also be availed for 10 year for a value equal to cost pf asset less salvage value.

The maximum depreciation availed will be equal to cost pf asset less salvage value. Depreciation is calculated with various methods such as straight line methid, declining balance method, units of production method etc.