Accounting MCQ Questions and Solutions with Explanations | Commerce

Depreciation is the process of allocating the cost of an asset over its useful life due to wear and tear, passage of time, or obsolescence.

In accounting, the term depreciation is often used in a wider sense, which also includes writing off the value of intangible assets (commonly called amortization).

Patent is an intangible asset with a limited legal life, and its value decreases over time. Therefore, its cost is systematically allocated over its useful life, making depreciation admissible.

Animal is a biological asset and is not depreciated in the traditional sense.

Tea plant, though a bearer plant, is not typically considered in such MCQs under depreciation in the conventional approach.

Goodwill is an intangible asset with an indefinite life and is not depreciated; instead, it is tested for impairment.

Hence, the correct answer is Patent.