If there is a loss on the disposal of a depreciable asset: no cash was received
ID: 2422735 • Letter: I
Question
If there is a loss on the disposal of a depreciable asset:
no cash was received in the disposal transaction
the net book value of the asset was negative.
in retrospect, the life over which the asset was depreciated was too short.
in retrospect, the depreciation expense recognized over the asset's life was too low.
A.no cash was received in the disposal transaction
B.the net book value of the asset was negative.
C.in retrospect, the life over which the asset was depreciated was too short.
D.in retrospect, the depreciation expense recognized over the asset's life was too low.
Explanation / Answer
Answer
If there is a loss on the disposal of a depreciable asset:
in retrospect, the depreciation expense recognized over the asset's life was too low.
Because it means we have undervalued our asset