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Define replacement of capital....

Define replacement of capital.

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A producer maintains a depreciation reserve fund over the expected life time of the capital asset to replace it at the end of its life. This is called replacement of capital and estimated value of depreciation is called current replacement cost.
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Knowledge Check

  • P,Q and R are three partners in a business. If Ps capital is equal to twice the capital of Q and Qs capital in three times the capital of R, find the ratio of the capitals of P,Q and R.

    A
    `6:3:1`
    B
    `1: 3: 6`
    C
    `2:3:6`
    D
    `3:6:1`

  • Human capital is

    A
    Social process
    B
    Economic process
    C
    Technical process
    D
    Econonic and Technical process.

  • The nature of capital is

    A
    an asset
    B
    a liability
    C
    an income
    D
    an expense

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