Question

Which of the following is/are cannot be treated a cause for providing depreciation?

• A. Obsolescence
• B. Depreciation is a appropriation of profit
• C. Physical wear and tear resulting from use
• D. All of the above

Answer 1

The correct option is B Depreciation is a appropriation of profit

Depreciation means diminution in the value of an asset, specially fixed asset, due to we must provide for such diminution or loss in our accounts for two reasons: (Transfer of annual depreciation to profit and loss account) The result is that the asset cannot be replaced at the earliest. It is an appropriation of profits.