Which of the following factors are primarily considered to determine the economic life of an asset?
Correct answer: B. Passage of time, asset usage, and obsolescence
- A. Tax regulations and SEBI guidelines
- B. Passage of time, asset usage, and obsolescence
- C. Tax regulations and asset usage
- D. SEBI guidelines and Asset usage
Explanation
Economic life depends mainly on how long the asset remains usable, including the effects of time, usage, and obsolescence. Tax rules and SEBI guidelines do not determine the asset’s actual economic life.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
Practise Accounting Principles
351 free Accounting Principles MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Accounting Principles questions
In which of the following methods, the cost of the asset is spread over in equal proportion during its useful economic life?
Which of the following statements is correct about Depreciation?
Depreciation is calculated on the____________?
Which of the following statements is true with regard to written down value method of depreciation?i. The rate at which the asset is written off reduces year after year ii. The amount of depreciation provided reduces from year to year iii. The rate of depreciation as well as the amount of depreciation reduce year after year iv. The value of the asset gets reduced to zero over a period of time
The portion of the acquisition cost of the asset yet to be allocated is known as___________?
Depreciation is a process of____________?