Question

True Color Printers Inc. has purchased a sophisticated printing press for $1 million. Which of the following is most likely to be true about the printing press?a. It will be depreciated over its useful life.b. It will be charged as an expense in the year it is bought.c. It will more likely be short-lived.d. It will retain its identity in the final product.

Answer 1

Answer:

a. It will be depreciated over its useful life.

Explanation:

Any capital asset when purchased is not straight forward charged in income statement, for this depreciation with respect to benefits for the period is charged against revenue, therefore depreciation is charged for the life of an asset matching against the benefits through the asset.

Printing press is a fixed asset and not a short term asset thus, depreciation will be charged on the cost of such asset in income statement.

Therefore, correct statement shall be

a. It will be depreciated over its useful life.