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Book value. In accounting, book value is the value of an asset [ 1 ] according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Traditionally, a company's book value is its total assets[clarification needed ...
Depreciation expense equals the composite depreciation rate times the balance in the asset account (historical cost). (0.20 * $6,500) $1,300. (0.20 * $6,500) $1,300. Debit depreciation expense and credit accumulated depreciation.
Depreciation: The depreciable amount (cost less residual value) should be allocated on a systematic basis over the asset's useful life. That is, the mark-down in value of the asset should be recognised as an expense in the income statement every accounting period throughout the asset's useful life. [ 1 ]
In economics, depreciation is the gradual decrease in the economic value of the capital stock of a firm, nation or other entity, either through physical depreciation, obsolescence or changes in the demand for the services of the capital in question. If the capital stock is in one period , gross (total) investment spending on newly produced ...
Actual cash value. In the property and casualty insurance industry, actual cash value (ACV) is a method of valuing insured property, or the value computed by that method. Actual cash value (ACV) is not equal to replacement cost value (RCV). Actual cash value is computed by subtracting depreciation from replacement cost. [1]
In tax accounting, adjusted basis is the net cost of an asset after adjusting for various tax-related items. [1] Adjusted Basis or Adjusted Tax Basis refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures. Example: Muhammad buys a lot for $100,000. He then erects a retail ...
The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. [4] Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity.
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, [1] pronounced / ˈ iː b ɪ t d ɑː,-b ə-, ˈ ɛ-/ [2]) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base.
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related to: cost less accumulated depreciation equals