Question

There are times when the cost of the fixed assets of the business are exactly equal to the amount in the related accumulated depreciation account. Please let us know when an entry should be made to remove the cost and the accumulated depreciation from the accounts. Also, let us know if it is permissible to record additional depreciation on the assets if they are still useful to the business. Please let us know why or why not.

Answer 1

a) An entry should be made to remove the cost and the accumulated depreciation from the accounts in the following situations 1. When the asset is sold 2. When the asset is replaced 3. When the asset is scraped (b) Is it permissible to record additional depreciation on the assets if they are still useful to the business Depreciation for a year is the apportionment of cost of an asset over the life of the asset. Means, instead of recognizing the ent ost of the asset as an expense in a single year, we just apportion the cost over the is fully depreciated, the cost of an asset is exactly equal to the amount in the related accumulated depreciation account Means, entire cost of the asset has been apportioned and there is no cost left to apportion So, when the an asset is fully depreciated and the asset is still useful, it is not permissible to record additional depreciation as ther is no cost left to apportion