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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

For some of the fixed assets of a business, the balance in Accumulated Depreciation is equal to the cost of the asset. (a) Is it permissible to record additional depreciation on the assets if they are still useful to the business? Explain. (b) When should an entry be made to remove the cost and the accumulated depreciation from the accounts?

(a)

To determine

Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

To explain: whether it is permissible to record additional depreciation on the assets if they are still useful in the business.

Explanation

The accumulated depreciation should not exceed the cost of the asset. If the assets are still used after fully depreciated, the addition...

(b)

To determine

To explain: accounting treatment for removing the cost and the accumulated depreciation from the accounts.

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