______ 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.
Inventory
The correct answer is option 2. The Inventory system of depreciation is followed for assets that are of small value or where the useful life of the asset cannot be accurately determined. This method is often used for items that are regularly replaced or consumed, such as office supplies or inventory.
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?
________ method is especially suited to mines, oil wells, quarries, sandpits and similar assets of a wasting character.
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?
