Question

Assertion (A): Building is a tangible asset it is shown as realised at book value, if its realised value not given.

Reason (R): Patent is an intangible asset and if its realised value is not given, it is realised at book value.

In the context of the above two statements, which option is correct?

Options

• Assertion (A) and Reason (R) are correct, but the Reason (R) is not the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

• Only Assertion (A) is correct.

• Assertion (A) is not correct, but the Reason (R) is correct.

Answer 1

Only Assertion (A) is correct.

Explanation:

If the realisation value is not given, a tangible asset (like a building) is assumed to be sold at its full book value, making the assertion true. However, an intangible asset (like patents) is assumed to realise zero or nil value when a firm closes down, making the reason completely false.