which is NOT true regarding depreciation? 1. it provides funds for the replaceme

Question

which is NOT true regarding depreciation? 1. it provides funds for the replacement of the asset through tax savings over the assets life. 2. it attempts to match the costs of acquiring an asset to the benefits to be derived from the asset. which is NOT true regarding depreciation? 1. it provides funds for the replacement of the asset through tax savings over the assets life. 2. it attempts to match the costs of acquiring an asset to the benefits to be derived from the asset. which is NOT true regarding depreciation? 1. it provides funds for the replacement of the asset through tax savings over the assets life. 2. it attempts to match the costs of acquiring an asset to the benefits to be derived from the asset.

Explanation / Answer

Statement 1 is false. Depreciation is just a simple apportion of the asset value over the useful life of the asset in the profit an loss account. It does not provide any means of funds to replace the asset. Hence it is correct to say that depreciation attempts to match the costs of acquiring asset to the benefits to be derived from the asset

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