If a company determines that, due to damage the recoverable cost of its asset is reduced, it increases accumulated amortization.

Question

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If an asset is damaged, the recoverable cost (the amount that can be received from the disposal or sale of the asset) is reduced, which means the asset's value is now lower than what was originally recorded. In accounting, when the value of an asset decreases, the amount of accumulated amortization, which represents the total amount of depreciation or amortization recorded to date, needs to be increased to reflect the decrease in value.

If a Company Determines That, Due to Damage the Recoverable