What is the accounting treatment for an asset that is fully depreciated, but continues to be used in a business?
An asset that is fully depreciated and continues to be used in the business will be reported on the balance sheet at its cost along with its accumulated depreciation. There will be no depreciation expense recorded after the asset is fully depreciated. No entry is required until the asset is disposed of through retirement, sale, salvage, etc.
To illustrate this, let’s assume that a machine with a cost of $100,000 was expected to have a useful life of five years and no salvage value. The company depreciated the asset at the rate of $20,000 per year for five years. If the machine is used for three more years, the depreciation expense will be $-0- in each of those three years. During those three years, the balance sheet will report its cost of $100,000 and its accumulated depreciation of $100,000—for a book value of $-0-.
Learn more about Depreciation.
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6 Responses to “What is the accounting treatment for an asset that is fully depreciated, but continues to be used in a business?”
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accounting treatment of insurance claim
iam a company having a car used for transportation,it costs me 100,000 L.E and its estimated useful life is 5 years then after the 5 years passes its book value will be zero,its accumulated depreciation will be zero also,and on the other hand i still have cost for this car”gas -repair” what is the right accounting treatment for it
according to ur illustration,
if assets after useful life be reported as 100000 in balance sheet and accumulated dep 100000 in balance sheet
my Q is ‘the assets and dep will be 100000 for the whole life of business or we will expense out the accum. dep
(we may make its market value and then charge depriciation)
dear sir
we are a public sector unit and fire occured in our board room and incurred a loss of Rs.40 lacs. Insurance claim is pending and how do we treat in our books of accounts.
is there any provision entry for claims to be received
thanks
senthil
i want to be member of the accounting coach
Dear Sir,
What is accounting treatment of cost of insurance on fixed assets? Do we capitalize the expense?