Monday
Reminder set
7am
Tuesday
Reminder set
7am
Wednesday
Reminder set
7am
Thursday
Reminder set
7am
Friday
Reminder set
7am
Saturday
Reminder set
7am
Sunday
Reminder set
7am
XSIQ
*
Accounting - Life of the asset and the residual value
Life of the asset and the residual value
The life of an asset is usually an estimate. This is to be remembered when
discussing questions relating to asset valuation. Firstly, we are using the
historical cost of the asset; secondly, the life is only an estimate,
thirdly, estimates are made as to the residual, disposal or scrap value of
the asset; and, finally, assets differ in the nature of their use. At no
time during the life of the business is the balance sheet a valuation
statement.
When discussing the 'life' of an asset it is important that the life be
regarded as the 'economic life'. That is to say that the asset is only of
value to the business whilst generating revenue.
The residual value is what the business expects to get from the asset when
it is disposed of, for example, traded in.
Previous | Next
Log in to save your progress and obtain a certificate in Alison’s free Diploma in Business and Legal Studies online course
Sign up to save your progress and obtain a certificate in Alison’s free Diploma in Business and Legal Studies online course
This is the name that will appear on your Certification
Please enter you email address and we will mail you a link to reset your password.