Obsolescence occurs when an asset is no longer useful in producing goods and services. It may be due to technological advances, changes in consumer preferences, or other factors that make the asset outdated or inefficient. It is not the same as inadequacy (C), which refers to a situation where the asset's capacity is too small to meet the company's needs, but the asset itself may still be useful.

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Obsolescence

Question 126

Multiple Choice

Obsolescence

A) Occurs when an asset is at the end of its useful life
B) Refers to a condition where a property,plant and equipment asset is no longer useful in producing goods and services
C) Refers to a condition where the capacity of a property,plant and equipment asset is too small to meet the company's productive demands
D) Is the same as inadequacy
E) None of these

Correct Answer: