Because the failure to record disposals of property, plant, and equipment can significantly affect the financial statements, the search for unrecorded disposals is essential. Which of the following is not a procedure used to verify disposals?
A) Make inquiries of management and production personnel about the possibility of the disposal of assets.
B) Review whether newly acquired assets replace existing assets.
C) Test the valuation of fixed assets recorded in prior periods.
D) Review plant modifications and changes in product line, property taxes, or insurance coverage.

Question

Quizplus · Accepted Answer

Testing the valuation of fixed assets recorded in prior periods is not directly relevant to verifying disposals. The other options are all procedures used to verify disposals.

Because the Failure to Record Disposals of Property, Plant, and Equipment