CA Foundation · Accounting · Depreciation and Amortisation
Which of the following is NOT a feature of depreciation?
The statement that depreciation arises only when the asset is sold is not a feature. Depreciation is a non-cash expense charged against each period's profit, allocating the asset's cost over its useful life, regardless of any sale.
- AIt is a non-cash expense
- BIt is charged against the profit of the period
- CIt is an allocation of cost over the asset's useful life
- DIt decreases only when the asset is soldCorrect
Explanation
Depreciation is a non-cash charge debited to the profit and loss account, allocating cost over the useful life. It is recorded every accounting period during use of the asset, not only on sale, so the statement that it arises only on sale is not a feature.
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