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Your friend Pete owns a small business and is unsure how to treat fully depreciated assets on his company's balance sheet. What advice should you offer to Pete?

Answer :

You must continue to disclose the assets and their accumulated depreciation on the balance sheet even after the assets have fully depreciated in order to show that they are still in use.

The accumulated depreciation of an asset can never exceed its cost, thus you must be careful not to incur any further depreciation on them.

A fully depreciated asset is one that solely has a salvage value for accounting purposes. Examples of such assets are properties, plants, and equipment (PP&E). If an asset is capitalized, a depreciation plan is used to write down the cost of the asset over a specified period of time. Theoretically, this provides a more accurate evaluation of the actual expenses associated with maintaining the business's operations.

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