Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories
A) salvage and functional
B) physical and functional
C) residual and salvage
D) functional and residual

Question

Quizplus · Accepted Answer

Physical factors refer to wear and tear that occurs as a result of usage or exposure to the elements, such as rust or corrosion. Functional factors refer to technological changes or obsolescence that make the asset less useful, even if it is still physically intact. Residual and salvage values are related to the eventual disposal of the asset, rather than its current usefulness. Therefore, option B, which separates factors into physical and functional categories, is the best choice.

Factors Contributing to a Decline in the Usefulness of a Fixed