Question

Consider the production costs for a firm, one of which is the cost of depreciation. Depreciation...

Consider the production costs for a firm, one of which is the cost of depreciation. Depreciation costs are

Question options:

A.an estimate of the loss of value of the firm's physical capital.

B.the cost of money borrowed to buy a durable asset.

C.irrelevant to an accounting of the firm's total costs.

D.payments to outside suppliers.

E.a measure of the depreciation of financial assets of the firm.
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Homework Answers

Answer #1

The depreciation cost is the noncash expenditure which is done on physical assets of a company. This is the estimated deduction of wear and tear of an asset.

Hence depreciation from the given options is A) an estimate of the loss of value of firm's physical capital.

The other options are irrelevant for it is not the payment to supplier nor it is relevant to firm's accounting cost and it is done for physical assets rather than financial assets.

Hence answer is option A)

(You can comment for doubts)

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