Question

Why might relying solely on the fixed asset disposal report to authorize the user department to dispose of a fixed asset be a potential concern?

A) Because user departments are not involved in the disposal process.
B) Because the report may not accurately reflect the condition or value of the fixed asset.
C) Because user departments have the final say in all disposal decisions.
D) Because fixed asset disposal does not require any authorization.

Answer 1

Relying only on the fixed asset disposal report may cause concerns due to potentially inaccurate reflections of the asset's condition or value, leading to poor asset management decisions.

Step-by-step explanation:

Relying solely on the fixed asset disposal report to authorize the user department to dispose of a fixed asset can be a potential concern primarily because the report may not accurately reflect the condition or value of the fixed asset. It is crucial for the report to have up-to-date and accurate information about the asset in order to determine if the disposal is appropriate and to ensure that the company is making informed decisions regarding its asset management. Factors such as wear and tear, obsolescence, and market conditions can massively affect the realizable value of an asset. Relying only on the report can lead to ineffective decision-making and potential financial loss for the company.