How does going concern concept related with depreciation of fixed asset

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Solution

Dear Student,
The going concern concept of accounting implies that the business entity will continue its operations in the future and will not liquidate due to any reason.
Depreciation is based on going concern because calculation of depreciation is done on the basis of expected economic life of fixed assets rather than their current market value.Companies assume that their business will continue for an indefinite period of time and the assets will be used in the business until fully depreciated.

Regards.

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