Unexpected obsolescence is a component of depreciation. (True or False with Reasons).

False,

Only expected obsolescence is a component of depreciation.

Explanation:-

Depreciation refers to a fall in the value of fixed assets due to normal wear and tear, passage of time or expected obsolescence.

Expected Obsolescence occurs due to change in technology or change in demand for goods and services. As expected obsolescence is an expected loss, it is managed by making provision for a Depreciation Reserve Fund.

Unexpected Obsolescence occurs due to natural calamities like earthquakes, floods, etc., or due to thefts, accidents, etc. Loss of value of fixed assets due to unexpected obsolescence is termed as ‘Capital Loss’.