________ method is especially suited to mines, oil wells, quarries, sandpits and similar assets of a wasting character.
Depletion
The correct answer is option 3. The Depletion method is used for natural resources like mines, oil wells, quarries, and sandpits, which deplete over time as they are extracted or used. This method allocates the cost of these resources as they are consumed. The other methods (amortisation, depreciation, and dilapidation) are used for intangible assets, tangible assets, and property condition, respectively, but not for natural resources.
Important Questions from Depreciation, Reserve & Provision
A state of deterioration, damage done to a building or other property during tenancy can be referred to as:
Which of the following methods of depreciation is prescribed by the Income Tax Act, 1961?
______ system of depreciation is followed in case of those assets which are of small values or where the life of the asset cannot be ascertained with certainty.
If a machine (having a scrap value of Rs.1,000) is purchased for Rs.10,000 and it has an effective life of 10 years of 1000 hours each, what will be the amount of depreciation per hour?
The original cost of an asset is Rs.1,00,000 with an estimated scrap value of Rs.16,000 at the end of its useful life of 5 years. The depreciation on the asset for its whole life is Rs.84,000, what will be the amount to be charged to the Profit & Loss A/c, if the Sinking Fund table shows that Re.0.180975 if invested yearly @5% p.a. produces Re.1 at the end of 5 years?
