Accounting · Depreciation
What is the primary purpose of providing depreciation on fixed assets?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1To artificially increase the reported net profit of the business
- 2To accumulate cash for the immediate replacement of the asset
- 3To systematically allocate the cost of a tangible asset over its useful life✓
- 4To track the short-term fluctuations in the market value of the asset
Correct answer
To systematically allocate the cost of a tangible asset over its useful life
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