Discuss briefly, the concept of 'Mixed Income of Self-Employed' under the Income method. Defend or refute the following statement, with valid argument : "Depreciation is fall in the value of an asset due to unexpected obsolescence".

Question

Accepted Answer

Mixed Income of Self-Employed refers to income generated by own-account workers (farmers, barbers, small traders) and unincorporated enterprises. It is the income of people who own and operate a business using their own factor services (land, labour, capital, entrepreneurship). The components of factor income cannot be separately identified.

For example, the income of a doctor running a clinic at his residence includes wages, rent, interest, and profit, and these elements cannot be separated from each other.

Defend or refute: Depreciation is indeed a fall in the value of an asset due to expected obsolescence. This statement is correct. Depreciation represents the systematic reduction in value of fixed assets due to wear and tear, passage of time, and technological obsolescence during their estimated useful life.