Which of the following statements is not correct?
A) Generally accepted accounting principles require that the original cost of a long-term asset continue to appear in the asset account until the disposition of the asset.
B) The book value of a long-term asset is reduced each year as depreciation is recorded.
C) Buildings and trucks are examples of long-term assets.
D) Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset.

Question

Quizplus · Accepted Answer

Salvage value is the estimated amount that an asset can be sold for at the end of its useful life. It is not computed by subtracting the accumulated depreciation from the cost of the asset. The correct formula to calculate the salvage value is the original cost of the asset minus its total depreciation.

Which of the Following Statements Is Not Correct