Match List – I with List – II.

Choose the correct answer from the options given below :

A-I, B-II, C-III, D-IV

The correct answer is option 3- A-I, B-II, C-III, D-IV.

* Diminution in intrinsic value of the asset- Depreciation. According to Institute of Cost and Management Accounting, London (ICMA) terminology “The depreciation is the diminution in intrinsic value of the asset due to use and/or lapse of time.”

* Writing-off the cost of intangible assets- Amortisation. Amortisation refers to writing-off the cost of intangible assets like patents, copyright, trade marks, franchises, goodwill which have utility for a specified period of time. The procedure for amortisation or periodic write-off of a portion of the cost of intangible assets is the same as that for the depreciation of fixed assets.

* Net Residual value- Scrap Value. Net Residual value (also known as scrap value or salvage value for accounting purpose) is the estimated net realisable value (or sale value) of the asset at the end of its useful life. The net residual value is calculated after deducting the expenses necessary for the disposal of the asset. 

* Obsolescence- Out-of-date. Obsolescence is another factor leading to depreciation of fixed assets. In ordinary language, obsolescence means the fact of being “out-of-date”. Obsolescence implies to an existing asset becoming out-of-date on account of the availability of better type of asset.