Because the Failure to Record Disposals of Property, Plant, and Equipment

question 80

Multiple Choice

Because the failure to record disposals of property, plant, and equipment can significantly affect the financial statements, the search for unrecorded disposals is essential. Which of the following is not a procedure used to verify disposals?

• A) Make inquiries of management and production personnel about the possibility of the disposal of assets.
• B) Review whether newly acquired assets replace existing assets.
• C) Test the valuation of fixed assets recorded in prior periods.
• D) Review plant modifications and changes in product line, property taxes, or insurance coverage.

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Definitions:

Alternative Fuels

Fuels other than traditional sources (like petroleum oils) used for transportation, including electric, hydrogen, biofuels, and natural gas, to reduce pollution and dependency on oil.

Electricity Generation

The process of producing electrical energy from primary energy sources, such as coal, natural gas, nuclear, solar, or wind.

Natural Gas

A fossil fuel formed from the decay of organic material over millions of years, used as a source of energy for heating, cooking, and electricity generation.

Hydropower

The generation of electricity by utilizing the energy of flowing water, typically by damming rivers to create reservoirs.