Question

Depreciation is defined as the Group of answer choices a. decrease in the stock of capital due to investment by firms. b. decrease in the stock of capital due to wear and tear. c. increase in the stock of capital due to investment by firms. d. increase in the stock of capital due to wear and tear.

Answer 1

Answer:

The correct answer is Option B.

Explanation:

Depreciation is defined as decrease in the available of an asset due to wear and tear, obsolescence, technological innovation, idleness, etc. Based on IAS 16 Property, plant and equipment, depreciation of an asset commences when it is available for use e.g., if an organization purchased a motor van and it is available for use but decided to park in the car park for long, whether it is being put to use or not, such asset would still be subject to wear and tear.

Answer 2

Answer:

b. decrease in the stock of capital due to wear and tear.

Explanation:

Depreciation is a reduction in the value of an asset over time, due in particular to wear and tear.

Depreciation is the gradual decrease in the economic value of the capital stock of a firm, nation or other entity, either through physical depreciation, obsolescence or changes in the demand for the services of the capital in question.

The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation. ... Machinery, equipment, currency are some examples of assets that are likely to depreciate over a specific period of time.