Accounting · Depreciation
How does depreciation affect the valuation of fixed assets in the balance sheet?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Depreciation is recorded as an asset in the balance sheet and does not reduce the asset's value.
- 2Depreciation has no effect on the value of fixed assets in the balance sheet.
- 3Depreciation reduces the asset's value in the balance sheet to reflect wear and tear.✓
- 4Depreciation increases the asset's value in the balance sheet over time.
Correct answer
Depreciation reduces the asset's value in the balance sheet to reflect wear and tear.
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