________ 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.
Similar Questions
Which of the following methods of depreciation is prescribed by the Income Tax Act, 1961?
Identify the correct pair of the causes of depreciation with its types.
A state of deterioration, damage done to a building or other property during tenancy can be referred to as:
A machine is purchased for Rs7,00,000. Expenses incurred on its cartage and installation Rs3,00,000. Calculate the amount of depreciation @ 20% p.a. according to Straight Line Method for the first year ending on 31st March, 2022, if this machine is purchased on 1st July, 2021.
The Sports Club of Orissa had received in 2022-2023, ₹2,000 towards subscription. Subscriptions for 2021-22 unpaid on 1 April 2022 were ₹200. Subscriptions paid in advance on 31 March 2022 were ₹50 and the same on 31 March 2023 were ₹40. Subscriptions for 2022-2023 unpaid on 31 March 2023 were ₹90. How will this be reflected in the books of accounts of a non-profit organisation?
A machine is purchased for ₹7,00,000. Expenses incurred on its cartage and installation ₹3,00,000. Depreciation is charged @ 20% p.a. according to the Straight Line Method for the first year ending on 31 March 2022. Calculate the difference in the amount of depreciation for the 1st year, if this machine was purchased on 1 April 2021 and if the machine was purchased on 1 July 2021.
______ 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?
________ refers to writing off the cost of intangible assets like patents, copyrights, trademarks, franchises, and goodwill which have utility for a specified period of time.
Important Questions from Depreciation, Reserve & Provision
Which of the following statement is FALSE in relation to the term depreciation?
________ refers to writing off the cost of intangible assets like patents, copyrights, trademarks, franchises, and goodwill which have utility for a specified period of time.
Which of the following statement is FALSE?
Which of the following statement is NOT TRUE in regard to reserve and provision?
Provision is _______ against profit.
