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Question
A company values its machinery at its original purchase cost minus accumulated depreciation. This valuation method is based on which of the following assumptions?
Options
Money Measurement Concept
Going Concern Concept
Realisation Principle
Dual Aspect Principle
MCQ
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Solution
Going Concern Concept
Explanation:
The Going Concern Concept assumes that a business will continue to operate indefinitely and has no intention or need to liquidate. Because the corporation intends to use the machinery for its entire working life rather than sell it tomorrow, the immediate market or resale value is immaterial. This enables the item to be safely documented at its historical cost and gradually written down through accumulated depreciation over time.
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