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GATE 2021 MN – Question 25

Mineral Economics, Mine Planning, Systems Engineering · Mineral Economics · 1 mark · Multiple choice

Which statement distinguishes depreciation and amortisation allowances in the source’s tax/accounting terminology?

  1. Depreciation applies to tangible assets over declared life; amortisation to intangible assets over a specified period.
  2. Depreciation applies to intangible assets over declared life; amortisation to tangible assets over a specified period.
  3. Depreciation applies to tangible assets over a specified period; amortisation to intangible assets over declared life.
  4. Depreciation applies to intangible assets over a specified period; amortisation to tangible assets over declared life.

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Correct answer: (A) Depreciation applies to tangible assets over declared life; amortisation to intangible assets over a specified period.

Explanation

The central distinction is tangible assets for depreciation and intangible assets for amortisation, making A the source’s intended formulation. Both allocate cost over an applicable useful or prescribed period. Actual tax periods depend on the relevant rules; this classification alone does not establish a deduction rate.

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