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Does depreciation purport to follow the actual fair market value of an asset? (6 sentences minimum)

Does depreciation purport to follow the actual fair market value of an asset? (6 sentences minimum)

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Answer #1

Yes becuse the carrying value, or book value, is an asset value based on the company's balance sheet, which takes the cost of the asset and subtracts its depreciation over time. The fair value of an asset is usually determined by the market and agreed upon by a willing buyer and seller, and it can fluctuate often. Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy.

marketable securities are recorded at their fair market value on the balance sheet, and impaired intangible assets are written down from historical cost to their fair market value. Different from the carrying value, the fair value of assets and liabilities is calculated on a mark-to-market accounting basis.

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