Question
In: Finance
A fully depreciated plant asset ________.
A fully depreciated plant asset ________.
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Expert Solution
A fully depreciated asset is a plant asset or fixed asset where the asset's book value is equal to its estimated salvage value. In other words, all of the depreciation that was intended (cost minus estimated salvage value) has been recorded.
If the fully depreciated asset continues to be used without improvement expenditures, there will be no further depreciation expense. The asset's cost and its accumulated depreciation will continue to be reported on the balance sheet until the asset is disposed of.
Example of a Fully Depreciated Asset
Assume that a machine having a cost of $100,000 was put into service 12 years ago. It was estimated to have a useful life of 10 years and a salvage value of $1,000. Today the asset continues to be used. The most recent balance sheet reported the machine at its cost of $100,000 minus its accumulated depreciation of $99,000. Hence, the machine's book value is $1,000 (which is equal to the estimated salvage value). This means that there is no depreciation expense in the current year, and the balance sheet will continue to report the machine's cost of $100,000 and its accumulated depreciation of $99,000.
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jeff jeffy answered 2 years agoRelated Solutions
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