Question

A measure of the degree to which capital wears out or becomes obsolete during a period is:________

Answer 1

Depreciation

Explanation:

Depreciation can be defined as the measure of the degree to which the economic value of a capital asset of an organization wear and tears over an existing period of time.

For example:

If a Tractor is bought for $15,000 and it has a useful lifespan of ten years, then every year, the value of the tractor will decline by $1,500. After five years, it will be worth $7,500. That is the tractor has depreciated by $7,500.