Question

Which of the following statements is correct?

Question 4 options:

	The net balance of a company's property and equipment equals the assets' acquisition cost
	The gross balance of a company's property and equipment equals the assets' net book value
	The net balance of a company's property and equipment equals the assets' accumulated depreciation
	The gross balance of a company's property and equipment equals the assets' acquisition cost

Answer 1

The correct answer for the question is

The gross balance of a company's property and equipment equals the assets acquisition cost.

Explanation: when ever we acquire any fixed asset, it is added in the gross block of respective asset. On that gross block depreciation is charged. When accumulated depreciation is substracted from the gross block, we arrive at net block. In order to know about cost of acquisition, we can see from gross block. So cost of acquisition is equal to gross balance in property and equipment.