Exercise 9-4

Alysha Monet has prepared the following list of statements about depreciation. Identify each statement as true or false.

1. Depreciation is a process of asset valuation, not cost allocation. select an option True False 2. Depreciation provides for the proper matching of expenses with revenues. select an option True False 3. The book value of a plant asset should approximate its fair value. select an option True False 4. Depreciation applies to three classes of plant assets: land, buildings, and equipment. select an option True False 5. Depreciation does not apply to a building because its usefulness and revenue-producing ability generally remain intact over time. select an option True False 6. The revenue-producing ability of a depreciable asset will decline due to wear and tear and to obsolescence. select an option True False 7. Recognizing depreciation on an asset results in an accumulation of cash for replacement of the asset. select an option True False 8. The balance in accumulated depreciation represents the total cost that has been charged to expense since placing the asset in service. select an option True False 9. Depreciation expense and accumulated depreciation are reported on the income statement. select an option True False 10. Three factors affect the computation of depreciation: cost, useful life, and salvage value.