2. Which statement is false?

a. Depreciation is based on the matching principle because it matches the cost of the asset with the revenue generated over the asset’s useful life.

b. Depreciation is a process of allocating the cost of a PPE over its useful life.

c. Depreciation creates a fund to replace the asset at the end of its useful life.

d. The cost of a PPE minus accumulated depreciation equals the asset’s book value.

Use the following data for questions 3–6.

On July 1, 20X6, Amir Communications purchased a new piece of equipment that cost $65,000.

The estimated useful life is 10 years and estimated residual value is $5,000.