Performance Stage Company Had a Professional Contract with Actor #1

question 29

Multiple Choice

Performance Stage Company had a professional contract with Actor #1 that was recorded in its accounting records at $300, 000.Johnson Company had a contract with Actor #2 that was recorded in its accounting records at $280, 000.Performance traded Actor #1 to Johnson for Actor #2 by exchanging the actors' contracts.The fair value of each contract was $320, 000.What amount should be shown in the accounting records after the exchange of actor contracts? $\begin{array}{lll}&\text {Performance}&\text {Johnson}\\\text { I. } & \$ 280,000 & \$ 280,000 \\\text { II. } & \$ 280,000 & \$ 300,000 \\\text { III. } & \$ 300,000 & \$ 280,000 \\\text { IV. } & \$ 320,000 & \$ 320,000\end{array}$

• A)I
• B)II
• C)III
• D)IV

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Definitions:

Gestalt Principle

A theory in psychology that emphasizes the human ability to perceive patterns, wholes, or organized structures rather than just simple summations of parts.

Closure

The psychological need to see an activity or task through to completion, or the sense of resolution or conclusion at the end of an emotional or narrative arc.

Figure-ground Principle

A perceptual grouping principle in which the mind differentiates an object (the figure) from its surrounding area (the ground).

Foreground-background

A concept in visual perception where the focus is on distinguishing the main subject (foreground) from the surrounding environment or background.