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Cash Flow from Investing Activities

Land is not a...

Question

Land is not a depreciable asset because __________.

A

its value always increases

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B

there in no maintenance cost of land

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C

life of the land is unlimited

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D

land cannot depreciate

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Solution

The correct option is B life of the land is unlimited
Land is not depreciated because land is assumed to have an unlimited useful life. Other long-lived assets such as land improvements, building, furnishing, equipment, etc. have limited useful lives. Therefore, the costs of those assets must be allocated to those limited accounting periods.

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Which method, is suitable for charging depreciation if the management does not want to increase burden on profits and loss account of depreciation and repair.

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$1$ . Current Asset	$1$ . Depreciation
$2$ . Nominal A/c	$2$ . Land
$3$ . Non-Depreciable Asset	$3$ . Insurance A/c
$4$ . Non-Cash Expense	$4$ . Prepaid Rent A/c

Select the correct answer from the options given.

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