Question

The book value of an asset is equal to its cost plus accumulated depreciation. True or...

The book value of an asset is equal to its cost plus accumulated depreciation.

True or False

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Answer #1

The book value of asset is calculated by subtracting accumulated depreciation from original cost of the asset.

The acquisition cost or actual cash value of an asset is the initial book value of the asset. This is due to fact that there is no accumulated depreciation immediate after purchasing of the asset. On progress of time the asset produces revenue and accumulated depreciation increases with constant acquisition cost. Hence book value goes on decreasing till it is same as that of salvage value or scrap value.

Hence the statement is False.

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