Total depreciation of an asset cannot exceed its:
Correct answer: D. Depreciable value
- A. Scrap value
- B. Residual value
- C. Market value
- D. Depreciable value
Explanation
Depreciable value is the asset's cost less its residual value, and this is the maximum amount that can be depreciated. Depreciation cannot reduce the carrying amount below the residual value.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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