Answer
Plant assets are retired for either physical factors or economic factors or a combination of both. Physical factors are the wear and tear, decay, and casualty factors which hinder the asset from performing indefinitely. Economic factors can be interpreted to mean any other constraint that develops to hinder the service life of an asset.
Work Step by Step
Inadequacy can be defined as a situation where an asset is no longer useful to the organization because the demands of the firm have increased. Supersession can be defined as a situation where the replacement of an asset occurs because another asset is more efficient and economical. Obsolescence, on the other hand, is the hybrid term that encompasses all other situations and is sometimes referred to as the major concept when economic factors are considered.
