A company is most likely to:A. use a fair value model for some investment property and a cost model for other investment property.B. change from the fair value model when transactions on comparable properties becomeless frequent.C. change from the fair value model when the company transfers investment property toproperty, plant, and equipment.

A company is most likely to:A. use a fair value model for some investment property and a cost model for other investment property.B. change from the fair value model when transactions on comparable properties becomeless frequent.C. change from the fair value model when the company transfers investment property toproperty, plant, and equipment.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4MC: Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers...

See similar textbooks

Related questions

Q: 1. A company is deciding whether to exchange an old asset for a new asset. Within the context of the…

A: The situation described is the replacement decision for the old asset. Sunk cost is the cost that…

Q: Do you think a company like Target would have significant research anddevelopment costs or…

Q: Whats is the effect of increasing the asset turnover (ATO) on enterprise price-to-book value,…

A: Asset turnover ratio is The asset turnover ratio measures the value of a company's sales or…

Q: An investment property should be measured initially at O A. Cost. B. Cost less accumulated…

A: Investment property is a kind of asset that is part of the balance sheet of the company. It means…

Q: If a company uses the fair value model to value investment property, changes in the fairvalue of the…

A: Under the fair value model, remeasuring of investment property is made at the end of each reporting…

Q: How does the company can benefit indirectly by leasing assets rather than buying?

A: Company can take benefit of leasing assets rather than buying assets due to many reasons: Leasing…

Q: Harrison Company determines that an opportunity cost of an alternate course of action is relevant to…

A: Opportunity costs refer to the amount of left-out benefit to attain another option, which means the…

Q: The book value of an asset is equal to the: a. asset's market value less its historical cost b.…

A: Book value is the net value of the assets that appears in balance sheet. it is calculated by…

Q: Which statement is correct regarding derecognition of financial assets? A. Transfer of risks and…

A: The process of derecognizing financial assets in which the entity fully transfers the asset and all…

Q: When using the fair value method, we adjust the reported amount of the investment for changes in…

A: The sales price agreed by the buyer and seller is termed as Fair value assuming both parties are…

Q: A company should immediately recognize: A) any gain when it constructs a piece of equipment at a…

A: Matching principle: According to this principle, the expense should be recognized when it is…

Q: The amount for which an asset could be exchanged, a liability settled , or an equity instrument…

A: The amount for which an asset could be exchanged, a liability settled , or an equity instrument…

Q: If the asset or disposal group is acquired as part of a business combination, it shall be measured…

A: Business combination is the agreement or combination between two or more than two companies in which…

Q: Biological assets are measured as follows Initial…

A: The biological assets are the assets that include animals and plants.

Q: When does a company record an asset related to a gain contingency? a. When future events will…

A: A contingency, in general, is an uncertain future event or condition that may result in a gain or a…

Q: Which of the following is correct about "Cost", "Expense", and "Loss" concepts? Select one: a.…

A: Income statement is one of the significant financial statements and the two components of this…

Q: Under IFRS, how are investment properties subsequently measured? a) The cost…

A: International Accounting Standard 40 on Investment states that the investment property should be…

Q: investment

A: In accounting terms, impairment is essentially a permanent decrease in the value of an asset. It may…

Q: Historical cost is based on actual, not merely possible, transactions. It is the acquisition price…

A: What is historical cost ? A Historical cost is a proportion of significant worth utilized in…

Q: Which of the following statements about capitalizing costs is correct?A. Capitalizing costs refers…

A: There are two type of costs treatments that are being done on all type of costs being incurred. One…

Q: Warner Borg Is a leading global supplier of highly engineered automotive systems and components…

A: We will only answer that question which is given completely. Kindly specify the same and resubmit…

Q: Which of the following is NOT correct regarding the rate of return on assets? a. The rate of…

A: Return on assets measures the profitability of a company relative to its assets. Return on assets =…

Q: Which one of the following is an essential characteristic of an asset? A. The inflow of future…

Question

A company is most likely to:
A. use a fair value model for some investment property and a cost model for other investment property.
B. change from the fair value model when transactions on comparable properties become
less frequent.
C. change from the fair value model when the company transfers investment property to
property, plant, and equipment.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

If a company uses the fair value model to value investment property, changes in the fairvalue of the asset are least likely to aff ect:A. net income.B. net operating income.C. other comprehensive income.
Which one of the following is an essential characteristic of an asset? A. The inflow of future economic benefits is controlled by the enterprise B. It must be exclusively owned and must be exchangeable C. The cost of the asset can be measured accurately D. It is a result of either a past or predictable transaction or activity
If the asset or disposal group is acquired as part of a business combination, it shall be measured at: A. The lower of “Cost” and “Fair value, less costs to sell’ B. Fair value, less costs to sell C. Cost D. The higher of “Cost” and “Fair value, less costs to sell’
KA. -Assume an investment classified as available for sale. Your value of market is less than its amortized cost. Which of the following assertions is correct? a. If management intends to sell the investment, it will recognize all of the impairment loss in the Statement of Income and Expenses. b. If management does not intend to sell the investment and the loss is for credit (credit los), will be recognized in the Statement of Income and Expenses. c. If management does not intend to sell the investment and the loss is not per credit (credit los), it will be recognized in Other comprehensive income . d. All of the above are correct. - Assume an investment in common stock accounted for using the heritage method. The investment will be impaired if: a. Its market value is less than its amortized cost and the loss of value it is not temporary (other than temporary) b. Its market value is less than its book value and the loss of value it is not temporary (other than temporary) c. Its market…
How does the company can benefit indirectly by leasing assets rather than buying?
Which of the following is correct about "Cost", "Expense", and "Loss" concepts? Select one: a. Expense is defined as reduction in firm's equity, other than from withdrawals of capital for which no compensating value has been received. b. Cost is the total of expense and loss. c. Expense is defined as an expired cost resulting from a productive usage of an asset. d. Loss is defined as an expired cost resulting from a productive usage of a non-current asset.
The amount for which an asset could be exchanged, a liability settled , or an equity instrument could be exchanged between knowledgeable parties is known as _________ a. Fair value cost principle b. Historical cost principle c. Futuristic cost principle d. Replacement cost Principle
.
A company is considering replacing one of its old assets with a new one. The original purchase price of the old asset represents – Group of answer choices Relevant cost Differential cost Sunk cost Opportunity cost
Which of the following is NOT correct regarding the rate of return on assets? a. The rate of return on assets measures management’s ability to productively employ all its resources. b. The rate of return on assets measures the return on all assets used regardless of how the assets are financed. c. The rate of return on assets is a measure of profitability. d. The rate of return on assets measures the return on the investment made by the owners of the entity. is B the correct answer?
When does a company record an asset related to a gain contingency? a. When future events will possibly occur and the amount can be reasonably estimated. b. When there is a remote chance that future events will occur and the amount can be reasonably estimated. c. When future events are probable to occur and the amount can be reasonably estimated. d. Gain contingencies are not recorded.
Which statement is correct regarding derecognition of financial assets? A. Transfer of risks and rewards is evaluated by determining the transferee’s ability to sell the asset. B. A sale and repurchase transaction where the repurchase price is a fixed price is a transfer of financial asset that qualifies for derecognition. C. The entity shall continue to recognize the transferred asset in its entirety if the transfer does not qualify for derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset. D. If an entity neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset, the entity shall continue to recognize the transferred asset to the extent of its continuing involvement.