Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-What term refers to the estimated decrease in the value of property, plant, and equipment that is due to wear and tear and/or obsolescence?
A) accumulated reduction
B) depreciation
C) value reduction
D) capital cost allowance

Question

Cost of the asset$100,000 
Life of the asset 5 years 
Depreciation rate20% 
Capital cost allowance rate 50% 
Residual value of the asset nil 
Income tax rate 50%
-What term refers to the estimated decrease in the value of property, plant, and equipment that is due to wear and tear and/or obsolescence?
A) accumulated reduction
B) depreciation
C) value reduction
D) capital cost allowance

Quizplus · Accepted Answer

Depreciation refers to the accounting method of allocating the cost of a tangible asset over its useful life, representing the decrease in value due to wear and tear, deterioration, or obsolescence.

Cost of the Asset$100,000