FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Question
Chapter 2, Problem 1MC
To determine
Identify the condition that is required to record an item as an asset.
Expert Solution & Answer
Answer to Problem 1MC
Option (d)
Explanation of Solution
Assets: These are the resources owned and controlled by business and used to produce benefits for the company. Assets are classified on the
Justification for the given options:
- a. Asset must be owned and controlled by the company. Therefore, this option is incorrect.
- b. Future benefits can be reliably measured from an asset. Therefore, this option is incorrect.
- c. Assets are classified as current, non-current (plant, property, and equipment, and intangible assets). Therefore, this option is incorrect.
- d. Assets are expected to yield the future benefits. Therefore, this option is correct.
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Students have asked these similar questions
The historical cost principle provides that:
Select one:
O a. the recorded amount of an acquired item should be the fair market value of the item.
b. None of the answers are correct
O c. tems whose costs are insignificant compared to other amounts on the financial statements may be accounted for in the
most expedient manner.
O d. assets and equities be expressed in terms of a common denominator.
O e. the expenses of generating revenue should be recognized in the same period that the related revenue is recognized.
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
Which of the following would not explain the difference between current and non-current assets?
A.The future benefit of current assets will generally be used up within the entity's operating cycle
B.An expenditure is classified as a non-current asset if it is considered to be material
C.The nature and intention of the business can help determine whether an expenditure should be classified as a non-current asset
D.An asset is classified as non-current if it is intended to be used within the business for a considerable period of time
Chapter 2 Solutions
FINANCIAL ACCOUNTING
Ch. 2 - Prob. 1MCCh. 2 - Prob. 2MCCh. 2 - Prob. 3MCCh. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Prob. 4QCh. 2 - Prob. 5Q
Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10QCh. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Prob. 13QCh. 2 - Prob. 14MECh. 2 - Prob. 15MECh. 2 - Prob. 16MECh. 2 - Prob. 17MECh. 2 - Prob. 18MECh. 2 - Prob. 19MECh. 2 - Prob. 20MECh. 2 - Prob. 21MECh. 2 - Prob. 22MECh. 2 - Prob. 23MECh. 2 - Prob. 24MECh. 2 - Prob. 25MECh. 2 - Prob. 26MECh. 2 - Prob. 27MECh. 2 - Prob. 28MECh. 2 - Prob. 29MECh. 2 - Prob. 30MECh. 2 - Prob. 31MECh. 2 - Prob. 32MECh. 2 - Prob. 33MECh. 2 - Prob. 34ECh. 2 - Prob. 35ECh. 2 - Prob. 36ECh. 2 - Prob. 37ECh. 2 - Prob. 38ECh. 2 - Prob. 39ECh. 2 - Prob. 40ECh. 2 - Prob. 41ECh. 2 - Prob. 42ECh. 2 - Prob. 43ECh. 2 - Prob. 44ECh. 2 - Prob. 45ECh. 2 - Prob. 46ECh. 2 - Prob. 47ECh. 2 - Prob. 48ECh. 2 - Prob. 49PCh. 2 - Prob. 50PCh. 2 - Prob. 51PCh. 2 - Prob. 52PCh. 2 - Prob. 53PCh. 2 - Prob. 54PCh. 2 - Prob. 55PCh. 2 - Prob. 56PCh. 2 - Prob. 57PCh. 2 - Prob. 58PCh. 2 - Prob. 59PCh. 2 - Prob. 60PCh. 2 - Prob. 61PCh. 2 - Prob. 62PCh. 2 - Prob. 63PCh. 2 - Prob. 64PCh. 2 - Prob. 65PCh. 2 - Prob. 66PCh. 2 - Prob. 67PCh. 2 - Prob. 68PCh. 2 - Prob. 69PCh. 2 - Prob. 70PCh. 2 - Prob. 71CPCh. 2 - Prob. 72CP
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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.arrow_forwardThe 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 Principlearrow_forwardWhich of the following statement best defines an asset? a. An asset is a resource owned by the entity with a financial value b. An asset is resource controlled by the entity from which future economic benefits are expected to be generated c. An asset is a resource controlled by an entity because of past events d. An asset is a resource controlled by an entity as a result of past events from future economic benefits are expected to be generatedarrow_forward
- Explain the meaning of an impairment of an asset. Provideseveral examples. What accounting event should occurwhen an asset has become substantially impaired?arrow_forwardThe generally accepted accounting principle that supports recording the value of a property at the purchase price when the market value is higher is the: A. conservatism principle B. going concern principle C. monetary principle D. cost principlearrow_forwardHow do we decide whether to capitalize (record as an asset) or expense a particular cost?arrow_forward
- This principle states that asset and income should not be overstated and liabilities and expense should not be understated.arrow_forwardHow does the revenue-expense approach differ from the asset-liability approach fordefining accounting elements?arrow_forwardWhat is the difference between a current asset and a non-current asset? Provide examples of each.arrow_forward
- one or more of the following statements are characteristics of assets:a. a probable future benefitb. a particular entity obtains the benefit and control others’ access to itc. does not give the rise to the entity to control the benefitd. a +barrow_forwardTRUE OR FALSE The principle of historical cost states that acquired assets should be recorded at their actual cost and not at what management thinks they are worth as at reporting date.arrow_forwardAny of the following should be met for borrowing cost to be capitalized, borrowing cost are being incurred; activities necessary to prepare the asset for its intended used or sale are being undertaken; expenditures for the asset are being incurred.TRUE OR FALSEarrow_forward
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