Depreciation applies to which type of assets?

Depreciation applies to which type of assets?

• A. Intangible assets
• B. Cash
• C. Liabilities
• D. Tangible assets

Answer: (D)

Depreciation is the process of allocating the cost of a tangible fixed asset over its useful life to reflect wear, aging, and obsolescence. Because it represents physical assets that degrade over time, depreciation applies to tangible assets like buildings, machinery, and vehicles used in operations. Cash doesn’t wear out, so it isn’t depreciated. Liabilities are obligations, not assets, so depreciation doesn’t apply to them. Intangible assets aren’t depreciated; they are amortized over their useful life (some may be indefinable in life and not amortized). So the asset type depreciation applies to is tangible assets.

Depreciation is the process of allocating the cost of a tangible fixed asset over its useful life to reflect wear, aging, and obsolescence. Because it represents physical assets that degrade over time, depreciation applies to tangible assets like buildings, machinery, and vehicles used in operations. Cash doesn’t wear out, so it isn’t depreciated. Liabilities are obligations, not assets, so depreciation doesn’t apply to them. Intangible assets aren’t depreciated; they are amortized over their useful life (some may be indefinable in life and not amortized). So the asset type depreciation applies to is tangible assets.