Question

The original value of an asset minus the accumulated depreciation at a given date is known as

• A. Salvage value
• B. Book value
• C. Scrap value
  (D) Lost Value
• D.

Hint:

Remember the fundamental accounting equation for an asset's worth on the books: **Book Value = Original Cost - Accumulated Depreciation**. The book value decreases over time as the asset is depreciated.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question tests the basic terminology of accounting, specifically related to the valuation of assets over time.
Step 2: Detailed Explanation:
Let's define the key terms:
- Original Value (or Cost): The amount paid to acquire an asset.
- Accumulated Depreciation: The total amount of depreciation expense that has been charged against an asset since it was put into service.
- Book Value: The value of an asset as it appears on the balance sheet. It is calculated as the original cost of the asset minus its accumulated depreciation. This exactly matches the definition in the question.
- Salvage Value (or Scrap Value): The estimated residual value of an asset at the end of its useful life. It's the amount the asset is expected to be sold for after it's fully depreciated.
- Lost Value: This is not a standard accounting term for asset valuation. The decline in value is captured by depreciation.
Step 3: Final Answer:
The original value of an asset minus the accumulated depreciation is the Book Value.