Advanced English Dialogue for Business – Fully depreciated

Listen to a Business English Dialogue About Fully depreciated

Brandon: Hey Lydia, do you know what it means when an asset is “fully depreciated” in business and finance?

Lydia: Yes, I do. It means that the entire cost of the asset has been accounted for as an expense over its useful life.

Brandon: That’s right. Once an asset is fully depreciated, it has no remaining book value on the company’s balance sheet.

Lydia: Does fully depreciated mean the asset is no longer useful?

Brandon: Not necessarily. While the asset may have no remaining financial value, it could still be operational and contribute to the company’s operations.

Lydia: How does fully depreciating an asset affect the company’s financial statements?

Brandon: Fully depreciating an asset reduces the company’s taxable income since depreciation expense is deducted from revenue when calculating taxes.

Lydia: Can assets other than tangible ones be fully depreciated?

Brandon: Yes, intangible assets like patents or trademarks can also be fully depreciated over their useful lives.

Lydia: What happens if a company continues to use an asset after it’s fully depreciated?

Brandon: If the asset is still being used, the company can continue to use it without any additional depreciation expense, but it won’t have any financial value on the balance sheet.

Lydia: Is there a limit to how quickly an asset can be fully depreciated?

Brandon: Yes, the rate of depreciation is determined by the asset’s useful life and the depreciation method chosen by the company, such as straight-line or accelerated depreciation.

Lydia: Thanks for explaining, Brandon. Fully depreciated assets seem like an important concept in accounting.

Brandon: You’re welcome, Lydia. It’s crucial for companies to accurately account for depreciation to reflect the true value of their assets over time.