Which item is the expense representing wear and tear on fixed assets?

• A. AMORTIZATION EXPENSE
• B. DEPLETION EXPENSE
• C. DEPRECIATION EXPENSE
• D. IMPAIRMENT CHARGE

Answer: (C)

Wear and tear on fixed assets is reflected through depreciation expense, which systematically allocates the asset’s cost over its estimated useful life as it is used. This is a non-cash expense that matches the asset’s consumption in each period. Amortization applies to intangible assets, not tangible fixed assets; depletion is used for natural resources as they’re extracted; impairment is a write-down to reflect a permanent drop in value, not the regular wear from use. For example, a machine bought for 100,000 with a 10-year life would be depreciated over that period, reducing its carrying amount by a portion each year (often evenly in straight-line terms). This shows how depreciation captures wear and tear over time.