What is the primary objective of depreciation in accounting?

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Systematic decrease in asset value reflecting market fluctuations as it gets olderMatching the asset's market price with its gradual loss in operational effectivenessDistributing the asset’s cost to avoid overstating Plant and Equipment values beyond their recoverable amount on the Balance SheetSpreading the cost of an asset over the time periods during which it provides economic benefitsNone of the above

Explanation

Depreciation, as defined under accounting standards like AS-6, represents the allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, usage, or obsolescence. It is not intended to track market value changes but to systematically expense the asset's cost in the periods benefiting from its use. This method ensures that the financial statements fairly represent the consumption of the asset's economic benefits over time.