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.