Fully depreciated asset

A fully depreciated asset has had its book value reduced to its expected salvage value. This reduction is accomplished through a series of scheduled depreciation charges over the life of the asset. If there is no expected salvage value for such an asset, then its book value is zero. When a business has a large number of fully depreciated assets on its books, this is an indicator that the firm has not been replacing and upgrading its assets on a regular basis, and so may require a substantial investment to bring it back into a fully competitive position.

A fixed asset may also become fully depreciated when an impairment charge is recorded against it, thereby reducing its book value to its salvage value.

Related Courses

Fixed Asset Accounting