Inadequacy means that the fixed assets of an enterprise cannot meet the growing production needs of the enterprise. Due to the changes in demand and the emergence of new inventions and improvements, it is difficult to predict the lack of production capacity and the obsolescence of old equipment. Enterprises usually dispose of assets with insufficient production capacity or outdated assets before the assets wear out. [1]
If an enterprise has used similar assets in the past, it can better predict the service life of new assets. On the contrary, if the enterprise has not used similar assets before, it can only rely on the experience of other enterprises or process research and judgment to predict the service life of new assets. The service life of assets disclosed by the fast-food manufacturer Tootsie Roll in Note 1 of its annual report.
