PRC-1 · Chapter 6 · Question 58 of 100
If an asset remains entirely idle throughout the accounting year, what is the depreciation charge under the sum-of-the-years'-digits method?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It is charged normally as per the formula.
Explanation
Time-based depreciation methods (like straight-line, reducing balance, and sum-of-digits) continue to charge depreciation even if the asset is idle, because physical deterioration and obsolescence still occur over time.
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