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Depreciation;signficant concept for capitalization policy

Choose the correct answer and explain in one sentence:

1. Depreciation, in accounting, is a process that results in:

a. an accurate measurement of the economic usefulness of an asset.
b. depreciable assets being reported in the balance sheet at their fair market value.
c. accumulating cash for the replacement of the asset.
d. spreading the cost of an asset over its useful life to the entity.

2. Which of the following accounting concepts/principles is most significant in the development of a capitalization policy?

a. Consistency.
b. Materiality.
c. Original Cost.
d. Matching of revenue and expense

Solution Preview

1. Depreciation, in accounting, is a process that results in:
d. ...

Solution Summary

This post shows how to calculate depreciation and discusses the most significant concept in the development of a capitalization policy

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