Depreciation on equipment that a company has already acquired is a past cost and therefore irrelevant.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that represents the decrease in the value of the equipment over time. As it is a past cost, it cannot be changed and is not relevant for future decision making. However, the residual value and estimated useful life of the equipment may still be relevant in determining its current book value and potential future replacement or sale.

Depreciation on Equipment That a Company Has Already Acquired Is