Question

Unforseen obsolescence of fixed capital assets during production is: (Choose the correct alternative)

a. Consumption of fixed capital

b. Capital loss

c. Income loss

d. None of the above

Answer 1

The correct option is (b). Capital loss is a loss of capital which is of abnormal and nonrecurring nature because these losses are unpredictable or unforeseen. For example, loss in value of fixed assets arises because of natural calamities, thefts, accidents and unforeseen obsolescence.