Depreciation allocates asset costs over useful life

Steps:

• Identify main purpose: Depreciation spreads the cost of a long-term asset over its useful life to match expenses with revenues (matching principle).
• Evaluate statements: Assume 1 is for tax reduction, 2 is cost allocation, 3 is asset value reduction on balance sheet.
• Select correct: Only statement 2 aligns with core accounting reason; others are secondary or incorrect.
• Confirm option: B chooses 2 only, excluding misconceptions.

Why B is correct:

• Depreciation follows the matching principle in accounting, allocating an asset's cost systematically over its useful life per GAAP/IFRS standards.

Why the others are wrong:

• A includes 1 (tax benefit is incidental, not primary purpose).
• C includes 3 (depreciation affects book value but isn't charged to reduce it arbitrarily).
• D selects only 3 (ignores core allocation role).

Final answer: B