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B is right answer
Depreciation accounted for to recover the cost that is incurred on fixed assets over their useful life. As a result it reduces profit and hence, reduces tax liability.
Note: Depreciation has to be charged completly or partially even if there is loss.
Hence, option B is correct to some extent but not completly.
Depreciation is the systematic allocation of depreciable cost of an asset over its useful life. Depreciation is recorded as an expense and another account Provision/Allowance for Depreciation is credited (Indirect Method). An expense certainly reduces the profit for the period and we all know that profit is determined after deducting all expenses from revenue. It is, therefore, option B is right.
Depreciation is charged to P&L account to accumulate reserve to replace the asset after its life span. Since it is a reserve out of profit (even in case of no profits) answer is option B, to reduce profit.
Answer will be
B)reduce the profit
B
the answel reduce the profit
Will Reduce Profit
Depreciation is the non cash expense of the company also it will certainly reduce the profit . So Options B is the right answer. NB: in Saudi Arabia for Zakat it will added to the profit bcz. it is not real expense.
Answers is B..its reducing Net Profrit
