TB MC Qu. 12-42 (Static) Select the incorrect statement... Select the incorrect statement regarding the recognition of depreciation on manufacturing equipment. Multiple Choice Recognizing depreciation on manufacturing equipment is an asset exchange event. Incorrect Depreciation on manufacturing equipment is an indirect product cost. Recognizing depreciation on manufacturing equipment decreases the equipment's book value and increases the Manufacturing Overhead account. If the equipment was used to work on a job, the amount of depreciation must be entered on the appropriate job cost sheet.