Finance Formulas / July 17, 2018 / Alyvia French
The depreciable value of your fixed asset is based on the amount you pay for it minus the amount you'd earn selling it for scrap at the end of the depreciation period. Start with the initial cost, or the amount you paid. Subtract the salvage value that you anticipate being able to earn back at the end of the item's useful life.
Inventory is included as current assets, but this item should be taken with a grain of salt. Different accounting methods can be used to inflate inventory, and in any case it is not nearly as liquid as other current assets. It may not even be as liquid as accounts receivable, which can be sold to third-party collection agencies, albeit at a steep discount.
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