E 10-16 LO3 204 REMS Luzer Tor 2017, 2018, and 2019. Understanding Depreciation Concepts Maria Muchon has prepared the following list of statements about depreciation. 1. Depreciation is a process of asset valuation, not cost allocation. 2. Three factors affect the computation of depreciation: cost, useful life, and residual value. 3. The book value of a plant asset should approximate its fair value, 4. Depreciation applies to three classes of plant assets: land, buildings, and equipment. 5. Depreciation does not apply to a building because its usefulness and revenue-producing ability generally remain intact over time. 6. Depreciation provides for the proper matching of expenses with revenues. 7. Recognizing depreciation on an asset results in an accumulation of cash for replacement of the asset 8. The revenue-producing ability of a depreciable asset will decline due to wear and tear and to obsolescence 9. Depreciation expense and accumulated depreciation are reported on the income statement. 10. The balance in accumulated depreciation represents the total cost that has been charged to expense. Identify each statement as true or false. If false, indicate how to correct the statement