Question

State whether the following statement is True or False with reasons:

The Profit or Loss on sale of fixed asset is ascertained only after charging depreciation.

Options

• True

• False

Answer 1

This statement is True.

Unless depreciation is charged to the revenues, the exact amount of profit or loss of business cannot be ascertained properly. Therefore, the profit or loss on sale of fixed assets is ascertained only after charging depreciation.