An asset's cost minus accumulated depreciation is its ________ value.Multiple Choicebooksalvageresidualmarket
Question
An asset's cost minus accumulated depreciation is its ________ value.
- Multiple Choice
- books
- salvager
- residual
- market
Solution
The correct answer to the question is book value.
Explanation:
Book value is defined as the value of an asset according to its balance sheet account. It is calculated as the original cost of the asset minus any accumulated depreciation, amortization, or impairment costs associated with the asset. This figure gives an accurate representation of the company's investment in its assets over time, which can help stakeholders assess the financial health of the business.
In contrast:
- Salvage value refers to the estimated resale value of an asset at the end of its useful life.
- Residual value is essentially synonymous with salvage value but is often used in leasing contexts.
- Market value is the price at which the asset could be sold in the current market, which can differ significantly from book value depending on market conditions.
Therefore, the term that fits the definition provided in the question is "book value".
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