Question

Depreciation expense is recorded for tangible fixed assets, whereas ______ expense is recorded for natural resources.

1) amortization
2) depletion
3) depreciation
4) accretion

Answer 1

Depreciation expense refers to the allocation of the cost of tangible fixed assets over their useful lives, whereas depletion expense refers to the allocation of the cost of natural resources as they are consumed.

Step-by-step explanation:

Depreciation expense is recorded for tangible fixed assets, whereas depletion expense is recorded for natural resources. Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. In contrast, depletion is the allocation of the cost of natural resources as they are consumed. For example, a mining company would record depletion expense as it extracts minerals from the earth.