If a company scraps an asset without any cash recovery, it recognizes a loss equal to the asset's book value.

Question

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When a company scraps an asset without any cash recovery, it recognizes a loss equal to the asset's book value. This is because the book value represents the cost of the asset to the company, and when the asset is no longer useful or functional, the company must recognize the loss in value on their financial statements.

If a Company Scraps an Asset Without Any Cash Recovery