If the Client Fails to Record Disposals of Property, Plant

question 71

Multiple Choice

If the client fails to record disposals of property, plant, and equipment, both the original cost of the asset account and the net book value will be incorrect. What will the effect be of this misstatement on the original cost and the book value?

• A) Both will be overstated indefinitely.
• B) The original cost will be overstated indefinitely, and the net book value will be overstated until the asset is fully depreciated.
• C) The original cost will be overstated indefinitely, and the net book value will be understated indefinitely.
• D) The original cost will be overstated indefinitely, and the net book value will be understated until the asset is fully depreciated.

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Definitions:

Permanently Frozen Ground

Ground that remains at or below 0°C (32°F) for at least two consecutive years, typically found in polar regions, known as permafrost.

Hadal Zone

The Hadal Zone refers to the deepest regions of the ocean, typically found in oceanic trenches, and ranges in depth from about 6,000 to 11,000 meters.

Benthic Environment

The ecological region at the lowest level of a body of water such as an ocean or a lake, including the sediment surface and some sub-surface layers.

Tropical Dry Forests

Ecosystems found in tropical regions characterized by a distinct dry season, supporting diverse plant and animal life adapted to arid conditions.