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Assertion: an asset should be kept until its physical life is exhausted. Reason: replacing it earlier wastes the service still in it.

  • A.the assertion is true but the reason given for it is false
  • B.the assertion is false although the reason offered is a true statement in itself
  • C.both the assertion and the reason are true and the reason explains the assertion
  • D.both the assertion and the reason are true but the reason does not explain the assertion

Answer: B

Some service is indeed left unused, but rising operating costs may well make that last stretch far dearer than a new asset would be over the same period. The economic service life is generally well short of the physical one.

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