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Depreciation

Depreciation ...

Question

Depreciation is a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from -
I. Use
II. Efflux of time
III. Obsolescence through technology and market changes
Select the correct answer from the options given below:

A

I & II

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B

II & III

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C

I & III

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D

Any of the above

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Solution

The correct option is D Any of the above
As per Accounting Standard-6, Depreciation is a measure of the wearing out,consumption or other loss of value of a appreciable asset arising from use, effluxion of time or obsolescence through technology and market changes.Depreciation is a non-cash flow expense for an entity.

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Q. __________ has defined depreciation as "a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortization of assets whose useful life is predetermined."

Q. _______ has defined depreciation as "a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time of obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortization of assets whose useful life is predetermined.

Q. Obsolescence of a depreciable asset may be caused by
(I) Technological changes.
(II) Improvement in production method.
(III) Change in market demand for the product or service output.
(IV) Legal or other restrictions.
The correct option is -

Q. Obsolescence of a depreciable asset may be caused by
I. Technological changes
II. Improvement in the production method
III. Legal or other restrictions

Q. Depreciation is the fall in the ____________ of a fixed asset through physical wear and tear due to use or passage of time or from any other cause.

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