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Income and Expenditure Account

Useful life o...

Question

Useful life of a depreciable asset should be estimated after considering certain factors. Which of the following factors is not mentioned by Accounting Standard-6 ?

A

Expected physical wear and tear

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B

Fall in market price

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C

Obsolescence

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D

Legal or other limit on the sue of the asset

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Solution

The correct option is A Fall in market price
Accounting standard 6 deals with depreciation accounting. The useful life of a depreciable assets should be estimated after considering the following factors:
1) Expected physical wear & tear
2) Obsolescence
3) Legal or other limits on the use of asset

But the fall in market price is not mentioned in the Accounting Standard 6.

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