Question

The first step in recording a disposal of a long-lived asset is to update that asset's depreciation

a. true
b. false

Answer 1

The statement is true; updating the asset's depreciation is the first step in recording its disposal to ensure the book value reflects its true value.

Step-by-step explanation:

The first step in recording a disposal of a long-lived asset is indeed to update that asset's depreciation. This is true because in order to determine the gain or loss on the disposal of an asset, the book value of the asset must be updated. Book value is calculated as the cost of the asset minus its accumulated depreciation. If the asset's depreciation is not up to date, the book value would not reflect the true value of the asset at the time of disposal.