PRC-1 · Chapter 6 · Question 60 of 100
According to the Conceptual Framework and accounting standards, what is the primary objective of depreciation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) To allocate the depreciable cost on a systematic basis over the asset's useful life.
Explanation
Depreciation is an allocation process (matching expense to revenue generation), not a valuation process or a cash fund accumulation process.
More Property, Plant and Equipment MCQs
- Q62Assuming estimates do not change, at the end of an asset's estimated useful life, its Carrying Amount will logically be equal to its:
- Q63Under IAS 16, how frequently must the useful life and residual value of property, plant, and equipment be formally reviewed?
- Q64A company constructed a building for Rs. 800,000. An accountant mistakenly capitalized an additional Rs. 25,000 opening ceremony expense…
- Q65Which of the following costs is NOT permitted to be capitalized as part of the cost of an item of Property, Plant, and Equipment?
- Q66When an entity decides to change its method of depreciation (e.g., from reducing balance to straight-line) because the pattern of…