Question

Which of the following does not explain the concept of depreciation?

A. An annual allowance for wear and tear of a capital good

B. Cost of the capital good ( minus scrap value divided by the number of years of its useful life)

C. Unexpected or sudden destruction or disuse of capital as can happen with accidents, natural calamities etc.

D. Maintenance and replacement cost of existing capital goods​

Answer 1

Answer:

option C is the answer

Explanation:

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Answer 2

Option C is the correct answer i.e. Unexpected or sudden destruction or disuse of capital as can happen with accidents, natural calamities, etc.

• Unexpected or sudden destruction or disuse of capital as can happen with accidents, natural calamities, etc does not explain the concept of depreciation.
• Depreciation is the normal wear and tear in the value of the fixed asset.
• Depreciation is obsolescence caused due to passage of time and its usage.
• Depreciation can be charged to fixed assets in two ways Straight Line Method and Written Down Value Method.
• Straight line method is a method in which depreciation is charged on asset on its original value or at the value it was purchased.
• Written Down Value is a method in which depreciation is charged on the depreciated value of the asset not on its original cost.