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.