Step 1: Examine the assertion \(A\).
The absolute value function is defined as
\[
|x|=
\begin{cases}
x, & x\ge 0,\\
-x, & x\lt 0.
\end{cases}
\]
For every point
\[
a\neq 0,
\]
the function is either \(x\) or \(-x\) in a neighbourhood of \(a\).
Since both \(x\) and \(-x\) are differentiable functions, \(f(x)=|x|\) is differentiable at every point
\[
a\neq 0.
\]
Now consider
\[
x=0.
\]
The left-hand derivative is
\[
\lim_{h\to 0^-}\frac{|h|-|0|}{h}
=
\lim_{h\to 0^-}\frac{-h}{h}
=
-1.
\]
The right-hand derivative is
\[
\lim_{h\to 0^+}\frac{|h|-|0|}{h}
=
\lim_{h\to 0^+}\frac{h}{h}
=
1.
\]
Since
\[
LHD\neq RHD,
\]
the derivative at \(x=0\) does not exist.
However,
\[
\lim_{x\to 0}|x|=0=f(0),
\]
so the function is continuous at \(x=0\).
Therefore, Assertion \(A\) is correct.
Step 2: Examine the reason \(R\).
A fundamental theorem of calculus states that
\[
\text{Differentiability } \Rightarrow \text{ Continuity}.
\]
Thus, if a function is differentiable at a point, it must be continuous there.
But the converse is not always true:
\[
\text{Continuity } \nRightarrow \text{ Differentiability}.
\]
A standard example is
\[
f(x)=|x|,
\]
which is continuous at \(x=0\) but not differentiable there.
Hence, Reason \(R\) is also correct.
Step 3: Determine whether \(R\) explains \(A\).
The assertion states that \(f(x)=|x|\) is continuous at \(x=0\) but not differentiable there.
The reason explains exactly why this is possible: differentiability implies continuity, but continuity alone does not guarantee differentiability.
Since \(|x|\) is a classic example illustrating this fact, the reason correctly explains the assertion.
Step 4: Final conclusion.
Therefore,
\[
\boxed{\text{A is correct, R is correct, and R is the correct explanation of A.}}
\]
Hence, the correct option is
\[
\boxed{(1)}
\]