Intercompany profits in inventory and land are realized through the eventual sale to outsiders, whereas depreciable assets are considered realized though consumption. What is realization through consumption? Multiple Choice • By increasing the asset, we realize the gain because the asset is worth more than it was originally. • By decreasing depreciation expense, we increase income and thus realize the unrealized gain. • By decreasing depreciation expense, we increase cost of goods sold. • By increasing depreciation expense, we decrease the cost of the asset to its original cost.
Intercompany profits in inventory and land are realized through the eventual sale to outsiders, whereas depreciable assets are considered realized though consumption. What is realization through consumption? Multiple Choice • By increasing the asset, we realize the gain because the asset is worth more than it was originally. • By decreasing depreciation expense, we increase income and thus realize the unrealized gain. • By decreasing depreciation expense, we increase cost of goods sold. • By increasing depreciation expense, we decrease the cost of the asset to its original cost.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Intercompany profits in inventory and land are realized through the eventual sale to outsiders, whereas
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