Question

If depreciation on asset is not provided than cost of asset will be _________.

• A. Undervalued
• B. Overvalued
• C. Remain the same
• D. None of the above.

Answer 1

The correct option is B Overvalued

For presenting a true and fair view of the financial position, it is necessary to cgarge deprecition . If depreciation is not charged, the unexpired cost of the asset concerned would be overstated. As a result, the balance sheet would not present true and fair view of the financial performance of an accounting entity.