Question

Which of the following is correct? Depreciable assets are those assets which:
(1) Are expected to be used for more than one accounting period.
(2) Have a limited useful life
(3) Are held for the purpose of re-sale
(4) None of these

• A. 1 and 2
• B. 2 and 3
• C. 2 and 4
• D. 1 and 3

Answer 1

Answer: (A)

1 and 2

Depreciable assets are those assets which
1. Are expected to be used for more than one accounting period i.e. fixed assets
2. Have a limited useful life.
Depreciation is a decrease in the value of the fixed assets due to wear and tear, obsolescence and passage of time.

Depreciation is charged only on the fixed Tangible Assets.