ObjectiveMcq
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Accounting Standards as well as the Companies Act, 2013 requires depreciation to be charged on a ______.
Correct Answer: A — Component basis
The correct answer is Component basis. Under this method, the cost of a large asset (e.g., machinery) is allocated to its different components and each component is depreciated separately, since components may have different useful lives. Charging depreciation at a single rate on the whole asset would distort its value. This method is prescribed by both Accounting Standards and the Companies Act, 2013.