Sunk costs - Book value and Market value i try to understand the concept of sunk cost and how we compute sunk costs when there is a difference between book and market value.
For example, if the book value of assets is $300 000 and the market value of the assets is $150 000.
Sunk costs = ($300 000 - $150 000 (depreciation)) = $150 000 ?
Or the sunk costs = 300 000 because the assets have been already paid ?
Many thanks,
Sunk cost &quot;is a cost that has already been incurred and cannot be recovered.&quot; For example, paying people to dig a hole in the ground. If you can sell the asset then the money you get can't be part of the sunk cost because that portion of the cost was recoverable.