Question

Assertion (A): Property, Plant and Equipment (Fixed Assets) is shown as Non-current Asset in the Balance Sheet of a company.

Reason (R): Property, Plant and Equipment (Fixed Assets) are used for a long time hence, is a Non-current Asset. Schedule III (Part I) of the Companies Act, 2013 requires it to be shown as Non-current Asset.

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

Options

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

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

• Only Assertion (A) is correct.

• Both Assertion (A) and Reason (R) are not correct.

Answer 1

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

Explanation:

The Assertion (A) is true because Property, Plant, and Equipment (PPE) are long-term physical assets presented under the major heading Non-current Assets. The Reason (R) is also true and directly explains why they are placed there: It highlights that these assets are kept for multi-year business operations and states that Part I of Schedule III explicitly mandates this long-term classification format.