Question

Chapter 3 Goodwill nature and valuation ques 16. Please help and make me understand why depreciation is charged on repairs

Answer 1

Answer: depreciation is wear and tear. While repairs are an expense.

Explanation:

Depreciation a/c

To Fixed asset

( depreciation reduced the value of fixed asset)

While

Repairs a/c

To Cash a/c

(Repaired machine and spent money for it, so it is an expense)