PRC-1 · Chapter 6 · Question 17 of 100
If an asset is temporarily idle and not used in production for three months during the year, what is the correct treatment for depreciation under the straight-line method?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Depreciation continues to be charged as normal.
Explanation
Under time-based methods like straight-line or reducing balance, depreciation does not cease when an asset becomes idle or is retired from active use, unless it is fully depreciated or formally classified as held for sale.
More Property, Plant and Equipment MCQs
- Q19The double-entry to record the annual depreciation charge for the year is:
- Q20A business disposes of a vehicle for Rs. 150,000 cash. The original cost of the vehicle was Rs. 400,000, and its accumulated depreciation…
- Q21In the disposal journal entry, how are the original Cost and the Accumulated Depreciation of the disposed asset fundamentally handled to…
- Q22A machine's cost is Rs. 500,000. Accumulated depreciation is Rs. 350,000. The machine is sold, and the business incurs a loss on disposal…
- Q23Which of the following describes the correct accounting treatment if management decides to change an asset's depreciation method from…