A sale of property plant and equipment requires the derecognition of the carrying amount of the asset and any cost of replacement part capitalised.

Question

Quizplus · Accepted Answer

When a property plant and equipment asset is sold, its carrying amount (i.e. its net book value) is removed from the financial statements through the process of derecognition. If any cost relating to the replacement of a part of the asset had been previously capitalised, then this cost would also need to be removed from the financial statements in the process of the sale. Therefore, the statement "A sale of property plant and equipment requires the derecognition of the carrying amount of the asset and any cost of replacement part capitalised" is true.

A Sale of Property Plant and Equipment Requires the Derecognition