Question

Does the difficulty in determining the current value of an asset create a problem in determining the depreciation expense that should be charged for a year?

Answer 1

the difficulty in determining the depreciation expense depends on the book value of the asset. Cost the of the asset is purchase price as reduced by accumulated depreciation. so what you consider is the book value. Current market value of the asset does not create any difficulty in determining the depreciation.Current value of an asset gains its importance when we check for any impairment loss. if any impairment loss then again the current value of the asset will create difficulty in assessing the depreciation that to be charged.