The amount by which the cost of an asset exceeds its accumulated depreciation is called:a.Net incomeb.Book valuec.Fair valued.Market value

Break Down the Problem

1. Identify the key terms in the question, particularly "cost of an asset" and "accumulated depreciation."
2. Understand the definitions of the options provided.

Relevant Concepts

1. Cost of Asset: This includes the purchase price and any costs necessary to prepare the asset for use.
2. Accumulated Depreciation: This is the total depreciation expense allocated to an asset since it was acquired.
3. Book Value: This is calculated as the cost of the asset minus its accumulated depreciation.
4. Fair Value: This is the estimated worth of an asset based on current market conditions.
5. Market Value: This refers to the price at which an asset would trade in the marketplace.
6. Net Income: This is the total revenue minus total expenses, not directly related to the asset's value.

Analysis and Detail

• The question is specifically asking for the financial term that denotes the difference between the cost of an asset and its accumulated depreciation.
• By definition, the book value of an asset is simply:

$\text{Book Value} = \text{Cost of Asset} - \text{Accumulated Depreciation}$

• The other options—net income, fair value, and market value—do not represent the relationship described in the question.

Verify and Summarize

• The term that directly correlates with the difference between an asset's cost and its depreciation is “book value.”

Final Answer

b. Book value