A depreciable asset has an estimated 15% salvage value. At the end of its estimated useful life, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?

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Business

Peyton

25 July, 22:47

A depreciable asset has an estimated 15% salvage value. At the end of its estimated useful life, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?

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Answers (1)

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Trevino · Answer 1

Declining method and double declining method

Explanation:

Neither of the depreciation methods will equal the accumulated depreciation with the cost of the asset. This is because at the end of the period, under straight line method, the accumulated depreciation will be equal to (Cost - Salvage value). This is because the depreciating method is considering depreciating the cost after salvage value, whereas in the declining method or double declining method, the original cost of the company is considered not the cost after salvage value. This means the maximum level to which the accumulated depreciation can reach is its original cost.