To calculate depreciation expense we do not use the estimated useful life of the asset. True False
Question
To calculate depreciation expense we do not use the estimated useful life of the asset. True False
Solution 1
False. To calculate depreciation expense, we do use the estimated useful life of the asset. The depreciation expense is calculated by dividing the cost of the asset (minus its salvage value) by its estimated useful life. This gives the amount of value the asset loses each year, which is the depreciation expense.
Solution 2
False
To calculate depreciation expense, the estimated useful life of the asset is indeed used. The useful life is a key factor in determining how much of the asset's cost is allocated as an expense each year.
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