2
Question
When depreciation fund account closes it transfers its balance to ________.
When depreciation fund account closes it transfers its balance to ________.
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Solution
The correct option is B old
Under depreciation fund method, funds are made available for the replacement of asset at the end of its useful life. The depreciation amount is fixed and remains the same year after year and is charged to profit and loss account every year through the creation of “depreciation fund” or “sinking fund”.
Depreciation fund account is closed by transfer of its balance to old asset account.
Hence, Option (C) is the correct answer.
Under depreciation fund method, funds are made available for the replacement of asset at the end of its useful life. The depreciation amount is fixed and remains the same year after year and is charged to profit and loss account every year through the creation of “depreciation fund” or “sinking fund”.
Depreciation fund account is closed by transfer of its balance to old asset account.
Hence, Option (C) is the correct answer.
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