Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

8. Long Lived Assets

Depreciation: Summary of Main Methods

Financial Accounting

8. Long Lived Assets

Depreciation: Summary of Main Methods

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Multiple Choice

Which term best describes a loss in the usefulness of a plant asset as a result of wear or obsolescence?

Depletion

Amortization

Impairment

Depreciation

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Verified step by step guidance

Understand the concept of depreciation: Depreciation refers to the systematic allocation of the cost of a tangible plant asset over its useful life due to wear and tear or obsolescence.

Differentiate depreciation from other terms: Depletion applies to natural resources, amortization applies to intangible assets, and impairment refers to a sudden reduction in the recoverable value of an asset.

Recognize the context of the question: The problem specifically mentions a loss in usefulness of a plant asset, which aligns with the definition of depreciation.

Relate depreciation to accounting practices: Depreciation is recorded periodically to reflect the reduction in the value of a plant asset on the financial statements.

Confirm the correct term: Based on the explanation and comparison, the term that best describes the loss in usefulness of a plant asset due to wear or obsolescence is depreciation.