Functional depreciation of an equipment is the measure of decrease in its value due to its _________________?
Correct answer: C. Obsolescence
- A. Ageing
- B. Wear and tear
- C. Obsolescence
- D. Breakdown or accident
Explanation
Functional depreciation results when equipment loses value because a newer, more efficient, or better-designed alternative makes it obsolete. Ageing and wear are forms of physical depreciation, while accidents cause abnormal depreciation.
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