Which of the following statements is TRUE?
A)The depreciable value of a tangible asset is the total acquisition cost of the asset.
B)The residual value of a tangible asset is the estimated amount to be received for an asset upon its disposal at the end of its useful life.
C)The useful life of a tangible asset is the time period over which the company believes it will own the asset.
D)The estimation of useful lives is almost always based upon when the tangible asset will physically wear out.
E)Depreciation attempts to measure the deteriorating market value of an asset.

Question

Quizplus · Accepted Answer

The residual value of a tangible asset is the estimated amount to be received for an asset upon its disposal at the end of its useful life. The depreciable value is the acquisition cost minus the residual value. The useful life is the estimated time period over which the asset will be used, and it may or may not coincide with the time period over which the company will own the asset. The estimation of useful lives takes into account wear and tear, but other factors such as technological obsolescence and changes in market demand may also be considered. Depreciation is a method of allocating the depreciable value of an asset over its useful life, and it does not attempt to measure the market value of the asset.

Which of the Following Statements Is TRUE