The depreciation on plant acquired by a manufacturing company is treated as

Assessment: WAEC SSCE - Financial Accounting - 2009 (Objective) Subject: Financial Accounting

Question 1 Report

The depreciation on plant acquired by a manufacturing company is treated as
Answer Details
The depreciation on plant acquired by a manufacturing company is treated as factory overhead. Depreciation is the gradual decrease in the value of an asset due to wear and tear, aging, and obsolescence over time. In a manufacturing company, the plant is a major asset that is used in the production process. The depreciation on plant is a cost that is incurred in the production of goods and is therefore treated as a factory overhead cost. This cost is allocated to the cost of goods sold and ultimately impacts the profitability of the manufacturing company.

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