compel some business organisations like corporate enterprises to provide depreciation on fixed assets. Test Your Understanding - II State whether the following statements are true or false: . Depreciation is a non-cash expense. .
Depreciation is also charged on current assets. . Depreciation is decline in the market value of tangible fixed assets. .
The main cause of depreciation is wear and tear caused by its usage. . Depreciation must be charged so as to ascertain true profit or loss of the business. .
Depletion term is used in case of intangible assets. . Depreciation provides fund for replacement. .
When market value of an asset is higher than book value, depreciation is not charged. . Depreciation is charged to reduce the value of asset to its market value. .
If adequate maintenance expenditure is incurred, depreciation need not be charged.