The Difference Between the Equipment Account Balance and the Accumulated

question 117

Multiple Choice

The difference between the equipment account balance and the accumulated amortization equipment account balance is called which of the following?

• A) market value
• B) acquisition cost
• C) net realizable value
• D) net book value

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset that allocates an equal amount of depreciation each year over the asset's useful life.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decline in value over time.

Accelerated Depreciation

A method of calculating the depreciation of an asset that assumes the asset will lose value more quickly in its initial years of use.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life evenly, resulting in equal depreciation expenses per year.