Read the two statements and choose the correct option.

I. Depreciation is also called consumption of fixed capital.

II. A machine destroyed in a flood is part of that year's depreciation.

Explanation

1. 01

   Consumption of fixed capital is the national accounts' name for depreciation, so I is true.

2. 02

   Depreciation covers only expected wear and obsolescence; flood damage is an unexpected capital loss. II is false.