An organisation always obtains negative cash flow regarding removal and disposal of assets. Is this statement true?

An organisation always obtains negative cash flow regarding removal and disposal of assets. Is this statement true?
A . No, the organisation may recover the value of the assets by reselling it
B. Yes, the organisation incurs high maintenance cost during the disposal processes
C. Yes, some assets require enormous decommissioning costs
D. No, disposal of assets always bring positive cash flow to the organisation

View Answer

Answer: A

Explanation:

Assets in their end of life need to be removed or disposed. Though an organisation can incur some costs in decommissioning or removal of the assets, it may recover costs by reselling the assets. Therefore, sometimes the organisation can gain positive cash flow from removal and disposal of assets. The answer should be "No, the organisation may recover the value of the assets by reselling it".

LO 3, AC 3.3