Question

It is appropriate to stop recording depreciation expense when the asset's:_________

a. depreciable cost is less than its fair value.
b. carrying amount exceeds its fair value.
c. carrying amount equals its residual value.
d. residual value equals total accumulated depreciation.

Answer 1

The appropriate time to stop recording depreciation expense on an asset is when its carrying amount exceeds its fair value.

Step-by-step explanation:

The correct answer to this question is b. carrying amount exceeds its fair value. When an asset's carrying amount exceeds its fair value, it indicates that the asset has suffered an impairment loss. In this case, the remaining future economic benefits of the asset are expected to be lower than its carrying amount, and as a result, it is appropriate to stop recording depreciation expense.