Depreciation of Fixed Capital Assets Refers to - Accountancy


Depreciation of fixed capital assets refers to :

(a) Normal wear and tear

(b) Foreseen obsolescence

(c) Normal wear and tear and foreseen obsolescence

(d) Unforeseen obsolescence.



The correct option is (c). Depreciation is the loss of value of fixed assets in use because of normal wear and tear, normal rate of accidental damages and expected or foreseen obsolescence. It is also called consumption of fixed capital.

Concept: Depreciation
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2015-2016 (March) Delhi Set 1


Explain the effect of depreciation of domestic currency on exports.

Which account is credited when depreciation is charged on the asset?

Answer in One Sentence only:

What is depreciation?

Answer in One Sentence only:

Why depreciation is charged?

Write the word/term/phrase which can substitute the following statement:

A continuous, gradual and permanent reduction in the value of a fixed asset.

Select the most appropriate answer from the alternatives given below and rewrite the sentence:

Decrease in the value of fixed assets is known as ______

Do you agree or disagree with the following statement:

Depreciation is non-cash expense.

Complete the following sentence:

Gradual and permanent decrease in the value of asset is known as ____________

Complete the following sentence:

Depreciation is derived from a Latin word ______.

What is meant by depreciation?

Depreciation expenses are included in:

What is the consumption of fixed capital called?

Correct the following statement and rewrite the statement.

Depreciation is calculated on all assets.

Correct the following statement and rewrite the statement.

Depreciation provided on assets is debited to an asset accounts

 Correct the following statement and rewrite the statement.

Profit on sale of the asset is credited to an asset account.

Distinguish between depreciation and capital loss.

On 1st April 2015, Farid of Nasik purchased a Motor Car for ₹ 55,000. The scrap value of the Motor Car was estimated at ₹ 10,000 and its estimated life is 10 years. The Registration charge for the Motor Car was ₹ 5,000.
Show Motor Car Account for first four years, assuming that the books of accounts are closed on 31st March every year.


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