Question

In: Accounting

The balance in the Accumulated Depreciation account represents the: Amount to be charged to expense in...

The balance in the Accumulated Depreciation account represents the:

Amount to be charged to expense in the current accounting period

Cash fund which is used to replace the fixed asset

None of the answers are correct

Amount that has been charged to depreciation expense since the acquisition of the fixed asset

Amount to be deducted from the fixed asset's purchase cost in order to determine its fair market value

Expert Solution

A balance in accumulated depreciation is arrived after making the below entry:

Account	Debit	Credit
Depreciation expense	XXX
Accumulated depreciation		XXX

Hence, after an amount has been charged to depreciation expense then a balance in accumulated depreciation is formed.

The correct option is:

Amount that has been charged to depreciation expense since the acquisition of the fixed asset

Explanation for incorrect options:

1. Amount to be charged to expense in the current accounting period

It is incorrect because, a balance is arrived after making expense entry and it is not amount to be charged to expense.

2 Cash fund which is used to replace the fixed asset:

It is incorrect because, accumulated depreciation represents a systematic way in which an asset is expensed.

3 Amount to be deducted from the fixed asset's purchase cost in order to determine its fair market value

Fixed asset cost - accumulated depreciation = net book value of asset not fair market value of asset

4 None of the answers are correct

It is incorrect as a correct option is givent

ekkarill92 answered 1 year ago

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