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Standard XII
Accountancy
Question

Which of the following is correct?
  1. Depreciation is not the process of valuation of assets- it is the process of allocation of costs to the period of its economic life
  2. If cost of machinery is more than book value there is no need of providing depreciation
  3. If plant and machinery are in good condition, through repairs etc., there is no need to provide depreciation
  4. All the above

A
If plant and machinery are in good condition, through repairs etc., there is no need to provide depreciation
B
Depreciation is not the process of valuation of assets- it is the process of allocation of costs to the period of its economic life
C
If cost of machinery is more than book value there is no need of providing depreciation
D
All the above
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Solution
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The purpose of recording depreciation as an expense is to spread the initial price of the asset over its useful life. For intangible assets - such as brands and intellectual property - this process of allocating costs over time is called amortization.

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Similar Questions
Q1
State whether the following Statements are True or False

1. There is need to provide depreciation if it is maintained with care.
2. Depreciation cannot be provided in case of loss in a financial year.
3. A Specific reserve can be created for any purpose.
4. Capital Reserves are not freely distributed as profits.
5. Under the written down value method depreciation is calculated on the original cost of an asset.
6. Depreciation is the process of valuation of asset.
7. Depreciation is a non-cash expense.
8. Secret reserves are disclosed in Balance Sheet.
9. General reserves is created to meet contingency liability.
10. Depreciation is charged only on fixed asset.
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Q2
Depreciation Accounting has been defined by the ________ as " a system of accounting which aims to distribute the cost or other basic value of tangible capital assets less salvage (if any) over the estimated useful life of the unit (which may be a group of assets) in a systematic and rational manner. It is a process of allocation and not of valuation".
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Q3
There is no need to provide depreciation if it is maintained with care.
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Q4
Depreciation is a process of allocation of the cost of fixed asset.
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Q5
If depreciation on asset is not provided than cost of asset will be _________.
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