Question

which of the following does not properly describe the depreciation process? multiple choice it is an allocation process. it attempts to determine an asset's market value. it involves the use of estimates. it is consistent with the matching principle.

Answer 1

The statement that does not properly describe the depreciation process is that it attempts to determine an asset's market value, as depreciation is about allocating the cost of an asset over its useful life, not assessing its market value.

Step-by-step explanation:

Among the options provided, the statement that does not properly describe the depreciation process is that it attempts to determine an asset's market value. Depreciation is a systematic allocation of the cost of a tangible asset over its useful life. The process is not intended to determine the market value of the asset but rather to expense the cost in a manner that reflects the pattern of an asset's use over time.

Depreciation is indeed an allocation process, which usually spreads the initial cost of the asset less any salvage value, over the expected useful life of the asset. It is also true that it involves the use of estimates, such as the asset's expected useful life and the salvage value at the end of its life.

Moreover, depreciation aligns with the matching principle in accounting, which states that expenses should be recorded in the period in which they are incurred to generate revenues, and thus it matches the expense of the asset with the revenues it helps produce.