Question

When a company revises an estimate used to record depreciation expense, the company should revise depreciation by using the formula _______ - revised salvage value)/revised remaining useful life.

Answer 1

Answer:

Book Value

Explanation:

Answer 2

Answer:

Book Value

Explanation:

Depreciation refers to fall in the value an asset as a result of normal wear and tear or due to efflux of time.

Depreciation is calculated using the following formula:

Depreciation expense per annum = $\frac{Original\ Cost\ -\ Estimated\ Salvage\ Value}{Life\ of\ the\ asset\ }$

When, a company revises an estimate such as salvage value or remaining useful life of the asset, depreciation expense would be recomputed using the following formula:

Depreciation expense = $\frac{Book\ Value\ - Revised\ Salvage\ Value}{Remaining\ Useful\ Life\ Of\ the\ Asset}$

wherein, Book Value = Original Cost - Accumulated Depreciation till date