Q10RQ - Horngren'S Financial And Managerial Accounting

Question

Question :What is the process of allocating the cost of a plant asset over its useful life called?

Step-by-Step Solution

Answer

Answer

Depreciation Expense

Step 1: Explanation of Property, Plant, and Equipment

Property, plant, and equipment refer to all tangible assets of long-term nature used in the business's operations. 

Step 2: Explanation of Depreciation Expense

The asset value and usefulness decline over time. This is treated as an expense for the business. Depreciation expense is the allocated cost of the plant asset over the asset's useful life.