MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Analysing Comparative Statement of Profit and Loss

Depreciation ...

Question

Depreciation provides fund for replacement of asset.

A

True

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

B

False

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A True
A portion of profits is set aside in the form of depreciation and accumulated each year to provide a definite amount at a certain future date for the specific purpose of replacement of asset at the end of its useful life.

Suggest Corrections

thumbs-up

0

Similar questions

Q. ___________ is created to provide for not only depreciation on the assets but also to provide sufficient funds for replacement of the assets at the end of its life.

Q. Providing depreciation ensures sufficient cash for asset replacement under-

Q. The amount of depreciation provided in the sinking fund method when compared to annuity method is?

On the basis of the information given below, answer the following question.
Z.Ltd. purchased machine having life of 3 years on 1st April 2008 for Rs 50,000. It is decided to provide for the replacement of the machine at the end of 3 years by setting - up a Sinking fund. Investment will fetch interest at 12 %p.a. Sinking fund tables shows that Rs. 0.296349 invested each year will produce Rs 1 at the end of 3 years at 12 % p.a. The investments are sold for Rs 28,500.

Depreciation to be provided for each year = ?

Q. Match List I with List II and select the correct answer using the codes given below the lists.

	List I		List II
A.	Leasehold property	1.	Depreciation Fund Method
B.	Mines, quarries etc.	2.	Annuity Method
C.	The interest lost on the acquisition of Method an asset	3.	Fixed Instalment Method
D.	To provide for replacement of assets at the end of its useful life	4.	Depletion Method

View More

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Comparative Financial Statement

ACCOUNTANCY

Watch in App

explore_more_icon

Explore more

Analysing Comparative Statement of Profit and Loss

Standard XII Accountancy

Join BYJU'S Learning Program

CrossIcon