If the client fails to record disposals of property, plant, and equipment, both the original cost of the asset account and the net book value will be incorrect.
A) The original cost will be overstated indefinitely, and the net book value will be overstated until the asset is fully depreciated.
B) The original cost will be overstated indefinitely, and the net book value will be understated until the asset is fully depreciated.
C) Both will be overstated indefinitely.
D) The original cost will be overstated indefinitely, and the net book value will be understated indefinitely.

Question

Quizplus · Accepted Answer

If a client fails to record disposals of property, plant, and equipment, the original cost of the asset will remain on the books, leading to an overstatement. The net book value will also be overstated until the asset is fully depreciated, after which it would correctly drop to zero if no disposal is recorded.

If the Client Fails to Record Disposals of Property, Plant