In the balance sheet, how assets are shown after charging depreciation?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Cost of asset - Depreciation.
Depreciation is the decline in the value of assets on account of wear and tear and passage of time. It is treated as a business expense and is debited to profit and loss account. This, in effect, amounts to writing-off a portion of the cost of an asset which has been used in the business for the purpose of earning profits. The entry for providing depreciation is : Depreciation A/c Dr. To Concerned asset A/c. In the balance sheet, the asset will be shown at cost minus the amount of depreciation.