alleryWhen the second alternative is used, the asset account in the ledger shows:
AHistorical cost always intact
BOriginal purchase price gross
CCost less depreciation balance
DResidual value at year end
Answer & Solution
Correct answer: C. Cost less depreciation balance
1. Second alternative directly credits the asset account each year.
2. The asset ledger therefore shows cost less depreciation, i.e. net book value.
3. The first alternative keeps cost intact via accumulated depreciation.
_Source: ICAI BoS Foundation Paper 1, Ch 5 "Depreciation & Amortisation", §3 second alternative_
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