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Horngren'S Financial And Managerial Accounting
Found in: Page 157

Short Answer

Question :How is book value calculated, and what does it represent?

Answer

Accumulated depreciation expense is subtracted from the cost. It represents the cost of an asset that has not been expensed till now.

See the step by step solution

Step by Step Solution

Step 1: Explanation of Depreciation Expense

It is the process of allocating the cost of fixed assets over the asset's useful life.

Step 2: Explanation of Book Value

Book value indicates the asset's net value after considering all its depreciation expenses recorded to date.

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