Multiple Choice
Which of the following statements about depreciation is true?
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8. Long Lived Assets
Depreciation: Summary of Main Methods
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Which of the following is NOT subject to depreciation?
A
Machinery
B
Land
C
Office Equipment
D
Buildings
Verified step by step guidance1
Understand the concept of depreciation: Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. It applies to assets that wear out, become obsolete, or lose value over time due to usage or passage of time.
Identify the types of assets subject to depreciation: Assets such as machinery, office equipment, and buildings are subject to depreciation because they have a finite useful life and their value diminishes over time.
Recognize the exception: Land is not subject to depreciation because it does not have a finite useful life. Land generally retains its value or may even appreciate over time, making it exempt from depreciation.
Analyze the options provided: Review each option (Machinery, Land, Office Equipment, Buildings) and determine whether it fits the criteria for depreciation.
Conclude which asset is NOT subject to depreciation: Based on the explanation above, land is the correct answer as it does not meet the criteria for depreciation.
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