Which of the following statements is correct regarding Depreciation?
I. Depreciation is termed as a loss of value of fixed assets due to wear and tear during its useful life.
II. Depreciation does not take into account unexpected or sudden destruction.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Both I and II.
Both statements are correct.
I. Depreciation refers to the loss in value of fixed assets due to wear and tear during their useful life.
II. Depreciation does not account for unexpected or sudden destruction, as it is based on the regular, anticipated decrease in asset value over time.