Depreciation is charged only on fixed asset.

True

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False

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Solution

The correct option is A True
Depreciation is the permanent and continuous decrease in the book value of a depreciable fixed asset due to use, effluxion of time, obsolescence, expiration of legal rights or any other cause.
An analysis of definition given above highlights the characteristics of depreciation as follows:
It is related to depreciable fixed assets only.
It is a fall in the book value of depreciable fixed asset.
It is a permanent decrease in the book value of an asset.

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Similar questions

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___is a method of depreciation, in which the cost of the asset is spread uniformly over the life years by writing off a fixed amount every year, where as in ___ method of depreciation, a fixed rate of depreciation is charged on the book value of the asset over its useful life.

Q. State whether the following Statements are True or False

1. There is need to provide depreciation if it is maintained with care.
2. Depreciation cannot be provided in case of loss in a financial year.
3. A Specific reserve can be created for any purpose.
4. Capital Reserves are not freely distributed as profits.
5. Under the written down value method depreciation is calculated on the original cost of an asset.
6. Depreciation is the process of valuation of asset.
7. Depreciation is a non-cash expense.
8. Secret reserves are disclosed in Balance Sheet.
9. General reserves is created to meet contingency liability.
10. Depreciation is charged only on fixed asset.

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