(a) Explain the following Terms:
i. Depreciation.
View Solution
Depreciation is the allocation of the Depreciable amount of an asset over its estimated useful life. This allocated amount is charged against the income statement/Profit and Loss Account. (2 marks)
ii. Useful Life of a Fixed Assets.
View Solution
The useful Life of an Asset is either the period over which a depreciable asset is expected to be used. OR the number of production/similar unit expected to be obtained from the Asset by the enterprise/company. (2 marks)
(b) There are four (4) factors /causes that contribute to depreciation of a Fixed Asset. List these factors or causes. (2 marks)
View Solution
- Physical deterioration/Expected physical wear and tear.
- Obsolescence/Economic factors.
- Depletion (Natural resources such as mines)
- Legal limit/Time factor.