Pulse Plastics Inc. realized a decrease in net plant and equipment fro

Pulse Plastics Inc. realized a decrease in net plant and equipment from last year’s balance sheet to this year. If the firm did not sell or salvage any existing plant and equipment, which of the following statements MUST be true?

A) The firm made no additional plant and equipment purchases.
B) The firm’s plant and equipment is an income statement entry not a balance sheet entry. This is a trick question!
C) Depreciation expense must exceed the addition to accumulated retained earnings.
D) Depreciation expense exceeded the value of new plant and equipment purchases.

ANSWER

D