When computing depreciation for a plant asset, which of the following must be estimated?
A) Useful life and residual value
B) Residual value and current market value
C) Useful life and current market value
D) Useful life, current market value, and residual value

Question

Quizplus · Accepted Answer

Both useful life and residual value must be estimated to compute depreciation for a plant asset. Useful life represents the estimated period over which the asset is expected to generate economic benefits, while residual value represents the estimated amount that the asset will be worth when it is retired (or sold) at the end of its useful life. Current market value is not relevant in computing depreciation, as it reflects the price that the asset could currently be sold for, rather than its historical cost or its estimated value at the end of its useful life.

When Computing Depreciation for a Plant Asset, Which of the Following