An annual allowance for wear and tear of capital goods is defined as?

The correct answer is Option (4) → Depreciation

Depreciation refers to the annual allowance for wear and tear of capital goods such as machinery, buildings, and equipment due to their regular use, passage of time, or obsolescence. It represents the reduction in the value of fixed capital assets over time and is deducted from Gross Domestic Product (GDP) to obtain Net Domestic Product (NDP).