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Interest on Capital Exceeds Profits

is not includ...

Question

_____________ is not included in the depreciable value of an asset for the purpose of depreciation.

A

Customs and excise duty

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B

Installation expenses

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C

Freight and transportation

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D

Interest charges for the period beyond the date the plant is put to use

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Solution

The correct option is D Interest charges for the period beyond the date the plant is put to use
All the incidental expenses incurred towards a particular asset till it is put to use are to capitalized with the cost of asset. Hence interest till the date the plant is put to use has to be debited to asset account only.

Therefore, interest charges for the period beyond the date the plant is put to use is not not included in the depreciable value of an asset for the purpose of depreciation and to be debited to profit & loss account as revenue expenditure.

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Similar questions

Q. Which of the following statements is/are false?
I. The term 'depreciation', 'depletion' and 'amortization' convey the same meaning.
II. Provision for depreciation a/c is debited when provision for depreciation a/c is created.
III. The main purpose of charging the profits and loss a/c with the amount of depreciation is to spread the cost of an asset over useful life for the purpose of income determination.

Q. Which of the following statements is/are false?
(I) The term 'depreciation', 'depletion' and 'amortization' convey the same meaning.
(II) Provision For Depreciation A/c debited when Provision For Depreciation A/c is created.
(III) The main purpose of charging the Profit & Loss A/c with the amount of depreciation is to spread the cost of an asset over its useful life for the purpose of income determination.
The correct option is -

Q. Which of the following statements is/are false?
I. The term 'depreciation', 'depletion' and 'amortization' have same meaning
II. Provision for depreciation A/c is debited when provision for depreciation is created.
III. The main purpose of charging the Profit and Loss A/c with the amount of depreciated is to spread the cost of an asset over its useful life.

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. __________ 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."

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