Because of inexact estimates of the service life and the residual value of a plant asset, a fully depreciated asset was sold in the current year at a material gain. This gain most likely should be reported
Answer(s): A
Income includes revenue and gains. Their essential nature is the same, and they are not treated as separate financial statement elements. Revenues occur in the course of ordinary activities. Gains may or may not occur in the course of ordinary activities. For example, gains may occur from the sale of noncurrent assets. Thus, the gain on the sale of a plant asset is not an operating item and should be classified in an income statement with separate operating and nonoperating sections in the other revenues and gains section.
Assume that employees confessed to a US $500, u-ui-1i- inventory theft but are not able to make restitution. How should this material fraud be shown in the company's financial statements?
Expenses include losses. Their essential nature is the same, and they are not treated as separate financial statement elements. Losses may or may not occur in the course of ordinary activities. For example, they may result from nonreci procal transactionse.g.. theft), reciprocal transactionse.g.. a sale of plant assets), or from holding assets or liabilities. Losses are typically displayed separately.
The assets of a liquidating entity should be shown on the balance sheet at their
Answer(s): C
When liquidation is imminent, and the going concern assumption is no longer valid, the most appropriate measurement attribute for assets is realizable value. which is the amount of cash currently obtainable by sale in an orderly disposal.
An objective of financial reporting is
The objectives of financial reporting are concerned with the underlying goals and purposes of accounting. They are to provide information that1) is useful to those making investment and credit decisions, assuming that those individuals have a reasonable understanding of business and economic activities:2) is helpful to current and potential investors and creditors and other users in assessing the amount. timing, and uncertainty of future cash flows; and3) discloses economic resources. claims to those resources, and the changes therein.
The amortization of intangible assets with finite useful lives is justified by the
Answer(s): B
Every business is assumed to be a going concern that will continue operating indefinitely. Thus. liquidation values are not important. For example. if an entity is not a going concern, its intangible assets are reported at liquidation values, not at historical cost net of amortization.
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