Question
Which of the following is not a difference between the accounting treatment for depreciation and depletion? The cost of the asset is the starting point
Which of the following is not a difference between the accounting treatment for depreciation and depletion?
The cost of the asset is the starting point from which computation of the amount of the periodic charge is made to operations for depreciation, but the fair value reassessed each year is the starting point for the periodic charge for depletion.
Depletion refers to the physical exhaustion or consumption of the asset while depreciation refers to the wear, tear, and obsolescence of the asset.
Depletion applies to natural resources while depreciation applies to plant and equipment.
Many methods are available in computing depreciation but only one is used to any extent in computing depletion.
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