Final answer:
Option (d), Depreciation expense is an estimate used in accounting to allocate the cost of an asset over its useful life. It is not an exact calculation, nor is it determined for all assets. The correct answer to the question is that depreciation expense is only an estimate.
Step-by-step explanation:
The question asks about the nature of depreciation expense in accounting. Depreciation expense is not an exact calculation, but rather an estimate that reflects the allocation of the cost of an asset over its useful life. It is based on the assumption that assets lose value over time as they are used in the operations of a business. Different methods exist for calculating depreciation, like the straight-line method, double-declining balance, or units of production, for example, but each involves making assumptions about asset life and salvage value.
It's important to note that not all assets are subject to depreciation. For instance, land is not depreciated because it generally does not lose value over time. However, physical assets like buildings, machinery, equipment, and vehicles are typically depreciated. The purpose of depreciation is to match the expense of using an asset with the revenue it generates, in accordance with the matching principle in accounting.
To answer the multiple-choice question, option a) 'Only an estimate' is correct. Option b) is incorrect because no appraisal can offer an exact value for depreciation, since it's based on projections and not on current market valuation. Option c) is not correct because depreciation is calculated even when the exact life cannot be determined precisely—it's an estimate. Lastly, option d) is inaccurate because some assets, like land, do not depreciate.