Question

In: Accounting

Does depreciation reflect a change in the fair value of an asset? Explain.

Does depreciation reflect a change in the fair value of an asset? Explain.

Solutions

Expert Solution

No, depreciation does not reflect a change in the fair value of an asset. Fair Value of the asset refers to the value determined by the market and agreed by willing buyer and seller.  It reflects current market price of asset. Moreover, fair value of asset keeps fluctuating.


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