Final answer:
The true definition of depreciation in accounting is the allocation of the cost of a tangible asset over its useful life, not a decrease in value or selling price. Expected depreciation in a currency leads to increased supply and decreased demand for that currency, causing its value to drop.
Step-by-step explanation:
The statement that the accounting definition of depreciation is the decrease in value or selling price of an asset is false. In accounting, depreciation refers to the systematic allocation of the cost of a tangible asset over its useful life. This means it is an accounting method for allocating the cost of a physical or tangible asset over its life expectancy.
When discussing expected depreciation in a currency, such as the British pound, it is important to understand that if depreciation is anticipated, individuals and businesses are likely to divest from that currency. This behavior would increase the supply of pounds while simultaneously decreasing the demand for pounds. Consequently, the result of this market response is a decrease in the value of the pound relative to other currencies, such as the US dollar.