If an uninsured asset is destroyed by fire before the end of its useful life, the firm suffers a loss measured by the asset's estimated salvage value.

Question

Quizplus · Accepted Answer

The loss is measured by the asset's book value at the time of destruction, not its salvage value. Salvage value is the estimated residual value at the end of its useful life, not the value lost when destroyed prematurely.

If an Uninsured Asset Is Destroyed by Fire Before the End