Which of the following is NOT a factor in determining the depreciation expense of an asset?
Practice Questions
1 question
Q1
Which of the following is NOT a factor in determining the depreciation expense of an asset?
Cost of the asset
Useful life
Market value
Salvage value
Market value is not a factor in determining depreciation expense; the relevant factors are cost, useful life, and salvage value.
Questions & Step-by-step Solutions
1 item
Q
Q: Which of the following is NOT a factor in determining the depreciation expense of an asset?
Solution: Market value is not a factor in determining depreciation expense; the relevant factors are cost, useful life, and salvage value.
Steps: 7
Step 1: Understand what depreciation expense is. It is the reduction in value of an asset over time.
Step 2: Identify the factors that affect depreciation expense. These are:
Step 3: Factor 1 - Cost: This is how much you paid for the asset.
Step 4: Factor 2 - Useful Life: This is how long you expect to use the asset.
Step 5: Factor 3 - Salvage Value: This is the estimated value of the asset at the end of its useful life.
Step 6: Now, consider the option 'Market Value'. Market value is the current selling price of the asset, but it does not affect how we calculate depreciation.
Step 7: Conclude that market value is NOT a factor in determining depreciation expense.
