Accumulated Depreciation of Plant Assets

B

Accumulated Depreciation reports the total amount of depreciation expense recognized in all prior periods since the asset(s) were put into service.

The correct answer is C. an expense.

Depreciation is the systematic allocation of the cost of a plant asset over its useful life. It is a method used to recognize and allocate the cost of an asset over the periods in which it generates revenue. As an asset is used and provides economic benefits, it gradually wears out, becomes obsolete, or loses value. Depreciation is the accounting process used to match the cost of the asset with the revenue it helps generate during its useful life.

The accumulated amount by which a plant asset has been depreciated over its useful life is commonly referred to as accumulated depreciation. Accumulated depreciation is a contra-asset account, which means it is deducted from the original cost of the plant asset on the balance sheet. It represents the total depreciation expense recognized for the asset since its acquisition.

While accumulated depreciation is presented on the balance sheet as a negative amount, it is not classified as a liability or an asset. Instead, it is a valuation account that offsets the cost of the plant asset, reducing its carrying value. By deducting the accumulated depreciation from the original cost, the net book value or net carrying value of the asset is derived.

The expense related to depreciation is recognized on the income statement. Each accounting period, a portion of the asset's cost is allocated as an expense to match the revenue generated by the asset during that period. This expense is referred to as depreciation expense.

To summarize, the accumulated amount by which a plant asset has been depreciated over its useful life is classified as an expense because it represents the portion of the asset's cost allocated and recognized as an expense over time.