[amp_mcq option1=”Provision for depreciation” option2=”Cumulative depreciation” option3=”Targeted depreciation” option4=”Depletion” correct=”option1″]
The correct answer is: A. Provision for depreciation
Accumulated depreciation is the total amount of depreciation that has been recorded for an asset over its useful life. It is a contra-asset account, which means that it is deducted from the asset account on the balance sheet.
Provision for depreciation is another term for accumulated depreciation. It is the amount of depreciation that has been charged against an asset over its useful life. It is calculated by multiplying the asset’s original cost by its depreciation rate.
The other options are incorrect because they do not accurately describe accumulated depreciation.
- Cumulative depreciation is the total amount of depreciation that has been recorded for an asset since it was acquired. It is calculated by adding up the annual depreciation expense for the asset.
- Targeted depreciation is a method of depreciation that focuses on depreciating an asset over a shorter period of time than its useful life. This is done in order to reduce the asset’s book value and increase the amount of depreciation expense that can be deducted in a given year.
- Depletion is a method of accounting for the exhaustion of natural resources. It is calculated by multiplying the resource’s estimated remaining reserves by its unit cost.