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14 14 typesofvaluation

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Unformatted text preview: le is forced to occur in a shorter time period 13 13 Types of Valuation In accounting, book value or carrying value is the value of an asset appears in balance sheet account balance. It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated. For assets, the value is based on the original cost of the asset minus the accumulated depreciation, amortization (intangible asset) or impairment costs made against the asset. 14 14 Types of Valuation Monthly or annual depreciation, amortization and depletion are used to reduce the book value of assets over time as they are "consumed" or used up in the process of obtaining revenue. Depreciation is used to record the declining value of buildings and equipment over time. Land is not depreciated. Amortization is used to record the declining value of intangible assets such as patents. For example if a patent is purchased for $12,000 and amortized over 15 years (180 months) then the monthly w...
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