Depreciation allocates asset costs over useful life

Steps:

• Identify purpose of depreciation: it systematically reduces asset value in financial statements.
• Recall accounting principle: costs must match revenues they generate over time.
• Evaluate choices: A relates to disposal, not ongoing charge; B is end-value estimate; C ignores historical cost; D aligns with spreading cost.
• Confirm D: matches cost to periods of benefit.

Why D is correct:

• Per matching principle in accounting, depreciation spreads an asset's cost over its useful life to allocate expenses to revenue-generating periods.

Why the others are wrong:

• A: Disposal profit/loss uses accumulated depreciation but isn't the reason for charging it annually.
• B: Scrap value reduces depreciable amount but doesn't explain charging depreciation.
• C: Depreciation reflects historical cost allocation, not future replacement prices.

Final answer: D