PRC-1 · Chapter 6 · Question 45 of 100
If a non-current asset is destroyed by a fire and there is no insurance coverage, how is the disposal accounted for?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The asset's carrying amount is transferred to the disposal account and written off as a total loss.
Explanation
Because the asset is destroyed, it must be derecognized. With zero proceeds, the entire carrying amount becomes a loss on disposal in the Statement of Profit or Loss.
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