P$7-65$A$.($Learning Objective $1$: Explaining the concept of depreciation$)$ The board of directors

of Crystal Structures, Inc., is reviewing the $20$X$6$ annual report. A new board member$$a wealthy

woman with little business experience$$questions the company accountant about the depreciation

amounts. The new board member wonders why depreciation expense has decreased from

$$240,000$ in $20$X$4$ to $$224,000$ in $20$X$5$ to $$216,000$ in $20$X$6.$ She states that she could understand

the decreasing annual amounts if the company had been disposing of properties each year, but that

has not occurred. Further, she notes that growth in the city is increasing the values of company

properties. Why is the company recording depreciation when the property values are increasing?