[amp_mcq option1=”Depreciation expenses” option2=”Accumulated depreciation” option3=”Cost of the fixed asset” option4=”Future economic benefits of a fixed asset” correct=”option3″]
The correct answer is: C. Cost of the fixed asset
Depreciable amount is the amount of the cost of an asset that is expected to be depreciated over its useful life. Residual value is the estimated amount that an asset will be worth at the end of its useful life. The cost of a fixed asset is the total amount of money that is spent to acquire the asset, including the purchase price, any installation costs, and any other costs that are necessary to make the asset ready for use.
The depreciable amount plus the residual value of a fixed asset equals the cost of the fixed asset. This is because the cost of a fixed asset is the total amount of money that is spent to acquire the asset, and the depreciable amount and the residual value are both components of the cost of the asset.
A. Depreciation expenses are the amounts of money that are charged to expense each period to allocate the cost of a fixed asset over its useful life.
B. Accumulated depreciation is the total amount of depreciation expenses that have been charged to expense for a fixed asset over its useful life.
D. Future economic benefits of a fixed asset are the benefits that are expected to be derived from using the asset over its useful life.