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    Question

    As per accounting standards, depreciable amount of a depreciable asset should be allocated on _______

    A Systematic Basis Correct Answer Incorrect Answer
    B written down value basis Correct Answer Incorrect Answer
    C Reducing Balance basis Correct Answer Incorrect Answer
    D Pro-rata basis Correct Answer Incorrect Answer
    E Percentage basis Correct Answer Incorrect Answer

    Solution

    AS 6 defines depreciation as a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, passage of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of the depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is predetermined. The depreciable amount of a depreciable asset should be allocated on a systematic basis to each accounting period during the useful life of the asset.

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