Question

The balance in the equipment account is $4,900,000, and the balance in the accumulated depreciation—equipment account is $2,646,000. a. What is the book value of the equipment? $ b. Does the balance in the accumulated depreciation account mean that the equipment's loss of value is $2,646,000? , because depreciation is an allocation of the of the equipment to the periods benefiting from its use.

Answer 1

Answer:

A) Book value= $2254000

B) Yes, it is the theoretical loss on value due to use.

Explanation:

Giving the following information:

The balance in the equipment account is $4,900,000

Balance in the accumulated depreciation= $2,646,000

A) Book value= purchase price - book value= 4900000-2646000= $2254000

B) Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its life. Through depreciation, a business will expense a portion of a capital asset's value over each year of its useful life. This means that each year, a capitalized asset is put to use and generates revenue, the cost associated with using up the asset is recorded. Accounting estimates the decrease in value using the information regarding the useful life of the asset.