Question

Why do we need to assess the depreciation value of a particular fixed asset?

• A. To reduce taxation amount
• B. To determine profit of the previous fiscal year
• C. )Mandatory rule by income tax
• D. Through depreciation, we get an idea regarding the net profit of a transaction

Answer 1

Answer:

D. Through depreciation, we get an idea regarding the net profit of a transaction

Depreciation is an expense, so it reduces profit, giving a correct view of net profit.