What is a Fully Depreciated Asset?
With a fully depreciated asset, the asset.equals the of the
How Does a Fully Depreciated Asset Work?
Let's assume Company XYZ bought a MegaWidget for $100,000 10 years ago. The MegaWidget depreciates by $10,000 a. Thus the recorded for the MegaWidget is:
Accumulated depreciation = $10,000 ( 1 ) + $10,000 (year 2 ) + $10,000 (year 3 depreciation) + $10,000 (year 4 depreciation) + $10,000 (year 5 depreciation) + $10,000 (year 6 depreciation) + $10,000 (year 7 depreciation) + $10,000 (year 8 depreciation) + $10,000 (year 9 depreciation) + $10,000 (year 10 depreciation) = $100,000.
Company XYZ net book value of the MegaWidget like this:
Net book value = $100,000 purchase price - $100,000 = $0. In other words, the is fully depreciated.
Why Does a Fully Depreciated Asset Matter?
balance sheet, and it is a key component of . is the value at which a company carries an on its balance sheet. It is equal to the cost of the asset minus . When an is fully depreciated, it is worth nothing for purposes, though the might actually have some scrap or minimal resale value. The method a company uses to calculate can influence when an asset becomes fully depreciated.is a key component of the
The disparity highlights one very important aspect of: It does not reflect true losses in the of an asset (or company).
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Is your auto loan's annual percentage rate (APR) higher than 6%? Or are your monthly payments on your car more than you can handle? Here's some good news: if you have good or excellent...Read More →
The bond market is a massive part of the global financial system. In fact, it's almost twice as large as the ...Read More →