I need help with a question in Accounting

Accounting
Tutor: None Selected Time limit: 1 Day

It says, the balance in the equipment account is $1,375,000 and the balance in the accumulated depreciation--equipment account is $725,000.

a) what is the book value of the equipment?

b) Does the balance in the accumulated depreciation account mean that the equipment's loss of value is $725,000? Explain?

Oct 3rd, 2015

Thank you for the opportunity to help you with your question!

a) The book value of he equipment =  Balance of he equipment value - balance of accumulaed depeciaion

                                                         =  1,375,000  - 725,000

                                                         =  $ 650,000


b) The balance in the accumulated depreciation means that the value of the assets decreased that much level and shows the book value after deducting it. It is not a loss value and this is the usage value of the equipment. 

Note: Loss of the equipment will arise if you sell the asset less than the book value.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Sep 16th, 2015

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