Final answer:
False. Accumulated depreciation is recognized on both natural resources that have been extracted and sold during the period, as well as those that have not been extracted or sold.
Step-by-step explanation:
False. Accumulated depreciation is recognized on both natural resources that have been extracted and sold during the period, as well as those that have not been extracted or sold.
Depreciation is a method of allocating the cost of a tangible asset over its useful life. In the case of natural resources, such as oil, gas, or minerals, depreciation is recognized based on the depletion of the resource rather than the physical wear and tear of the asset. This allows businesses to account for the decrease in value of the resource over time as it is extracted and used.
For example, if a mining company has a reserve of coal and extracts and sells a portion of it during the year, they would recognize accumulated depreciation based on the depletion of the coal reserve. This reflects the decrease in the value of the remaining coal reserve as it is consumed and reduces the company's future earning potential.