An Accountant Is Not Sure on How to Recognise an Asset

question 45

Multiple Choice

An accountant is not sure on how to recognise an asset that is purchased in excess of fair value.Which of the following action will you recommend?

• A) Recognise the asset at fair value and the excess as Goodwill.
• B) Recognise the asset at fair value and the excess as a loss on purchase.
• C) Recognise the asset at fair value and the excess as receivable from supplier.
• D) Recognise the asset at cost.
• E) None of the given answers.

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Definitions:

Foreign Sovereign Immunities Act

U.S. legislation that sets the limitations as to whether a foreign sovereign nation (and its political subdivisions, agencies, or instrumentalities) may be sued in U.S. courts.

U.S. Citizens

Individuals who are legally recognized as members of the United States, either by birth or naturalization, with specific rights and obligations.

GATT

The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement aimed at reducing trade barriers and promoting international trade until it was replaced by the WTO in 1995.

Dumping

The practice of exporting goods at a price lower than the home market price, usually considered as an unfair trade practice and often subject to penalties.