If an old machine becomes almost useless due to new technology, what does this illustrate?
Answer and explanation
Correct answer: Depreciation due to obsolescence
Obsolescence occurs when a new technology, design or method makes an existing asset less useful or less valuable. The old machine may still operate physically, but it loses economic usefulness because a newer machine performs the same work more efficiently. Consumption expenditure, transfer payments and saving describe spending or income allocation, not technological loss in an asset’s value.
Frequently asked questions
What is the correct answer to this question?
Depreciation due to obsolescence
Why is this the correct answer?
Obsolescence occurs when a new technology, design or method makes an existing asset less useful or less valuable. The old machine may still operate physically, but it loses economic usefulness because a newer machine performs the same work more efficiently. Consumption expenditure, transfer payments and saving describe spending or income allocation, not technological loss in an asset’s value.
Which subject and chapter does this question cover?
This is a Class 11 Accountancy question. Chapter: Depreciation, Provisions, and Reserves.
