Which of the following factors are primarily considered to determine the economic life of an asset?
Correct answer: A. Passage of time, asset usage, and obsolescence
- A. Passage of time, asset usage, and obsolescence
- B. Tax regulations and SEBI guidelines
- 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.
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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.
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