PRC-1 · Chapter 6 · Question 69 of 100
Entity A has PPE with a cost of 100 million and accumulated depreciation of 80 million. Entity B has PPE with a cost of 25 million and accumulated depreciation of 5 million. Both have a carrying amount of 20 million. Which conclusion is most logical?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Entity A has initially invested more in non-current assets and holds older assets compared to Entity B.
Explanation
Entity A's assets are 80% depreciated (80/100), implying they are much older, whereas B's are only 20% depreciated (5/25). A also had a much higher initial capital investment.
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