A utility installation company conducts an annual review of its assets. Included with its equipment are several trenching machines that were purchased three years ago at a cost of $85,000 each.
How should this value be categorized in the asset management system?
A . Equity
B . Book
C . Market
D . Historic
Answer: D
Explanation:
The value of the trenching machines, purchased at a cost of $85,000 each three years ago, should be categorized as historic in the asset management system. This refers to the original purchase cost of
the assets, which is recorded for accounting and asset tracking purposes. It provides a baseline for depreciation calculations and asset management.
Reference: Accounting standards specify that assets should be recorded at their historical cost to provide accurate financial reporting.
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