In Calculating Depreciation, Residual Value Is

question 123

Multiple Choice

In calculating depreciation, residual value is

• A) the fair value of the asset on the date of acquisition.
• B) subtracted from accumulated depreciation to determine the asset's depreciable cost.
• C) an estimate of the asset's value at the end of its useful life.
• D) ignored in all the depreciation methods.

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Definitions:

Accounts Payable

Money owed by a business to its suppliers or creditors for goods and services received but not yet paid for.

Revolving Credit Agreement

A credit arrangement that allows a company or individual to borrow, repay, and borrow again up to a certain credit limit.

Commitment Fee

A fee charged by a bank for guaranteeing to have loanable funds available. The fee is charged on un borrowed amounts up to the maximum of the guarantee. See Revolving credit agreement.

Line of Credit

An arrangement between a financial institution and a customer that establishes a maximum loan balance the borrower can access.