Accounting for IGCSE & O level - Final Statements (Section 9 - No. 32)

What is the purpose of depreciation?

To record the increase in value of an asset.

To allocate the cost of a long-term asset over its useful life.

To calculate the market value of an asset.

To reduce a company's tax liability.

Depreciation systematically allocates the cost of a long-term asset (like equipment) over its useful life.