Obsolescence refers to a situation where an asset is no longer useful in producing goods and services. It usually occurs when a property, plant, and equipment asset becomes outdated due to technological advances or changes in market demand. It is different from inadequacy, where the asset may still be useful but its capacity is too small to meet the company's current productive demands.

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Obsolescence

Question 83

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 answers is correct.

Correct Answer: