The correct answer is: D. Written Down Value (WDV)
Fixed assets are shown at their written down value in the balance sheet. This is the cost of the asset, less any accumulated depreciation. Depreciation is an accounting concept that allows businesses to spread the cost of an asset over its useful life. This is done by allocating a portion of the cost of the asset to each accounting period in which it is used.
The cost of a fixed asset is usually its purchase price, plus any costs incurred in getting it ready for use. For example, if a business purchases a piece of equipment for $100,000 and pays $10,000 in shipping and installation costs, the cost of the asset would be $110,000.
Accumulated depreciation is the total amount of depreciation that has been recorded for an asset. It is calculated by multiplying the asset's cost by the depreciation rate. The depreciation rate is a percentage that is used to estimate how much of the asset's value will be used up each year.
The written down value of an asset is its cost, less its accumulated depreciation. For example, if a business has a piece of equipment with a cost of $110,000 and accumulated depreciation of $50,000, the written down value of the asset would be $60,000.
Fixed assets are shown at their written down value in the balance sheet because this is the amount that the business expects to recover from the asset. The written down value is also used to calculate the depreciation expense for the asset.
