Question

How is depreciation accounted for if disposal of a plant asset occurs during the year? A : It is not recorded for the year. B : It is not recorded if the asset is scrapped. C : It is recorded for the fraction of the year to the date of the disposal. D : It is recorded for the whole year.

Answer 1

Answer:

C : It is recorded for the fraction of the year to the date of the disposal.

Explanation:

Depreciation is the expense charged for providing against benefits arising through the assets. When any assets are to be sold, then depreciation is to be provided against the time period it is used as the benefit have been received for such.

Therefore, even in case of sales of the asset, the depreciation is provided for the period, it is in the books, and held in hand.

Therefore, the correct statement is:

Statement C