Which statement is not correct?
A) If an asset is scrapped as worthless before it is fully depreciated its original cost represents an expense on disposal.
B) If an asset is scrapped as worthless before it is fully depreciated its carrying amount represents an expense on disposal.
C) An amount paid to remove an asset that is scrapped before it is fully depreciated is an addition to the expense recorded on its disposal.
D) When an asset is scrapped during the year an entry should be made to record depreciation expense for the portion of the year before scrapping.

Question

Quizplus · Accepted Answer

B is the correct statement because when an asset is scrapped before it is fully depreciated, its carrying amount (original cost minus accumulated depreciation) is considered an expense upon disposal. A is incorrect because it's the carrying amount, not the original cost, that represents the expense. C is correct as costs to remove the asset add to the disposal expense. D is also correct because depreciation expense should be recorded for the time the asset was in use during the year before it was scrapped.

Which Statement Is Not Correct