Which statement defines the role of depreciation?

The role of depreciation is primarily to allocate the cost of an asset over its useful life. This process reflects the usage and wear-and-tear of the asset over time, enabling businesses to match the expense of utilizing that asset with the revenue it generates. By systematically expensing a portion of the asset's cost each accounting period, companies adhere to the matching principle, which is fundamental in accrual accounting.

This allocation helps provide a clearer picture of a company's financial performance, as it prevents a large upfront expense from distorting profitability in the years an asset is acquired. It also contributes to the accurate representation of the asset's value on the balance sheet, ensuring that financial statements reflect both the current condition of the asset and the expenses associated with its use.

Other answer choices, while related to financial reporting and analysis, do not accurately define the primary function of depreciation. Measuring cash flows, reporting future revenue predictions, and assessing market value involve different accounting and financial evaluation processes that are not directly tied to the concept of depreciation.