An Entity Acquired an Item of Plant in Exchange for an Item

question 33

Multiple Choice

An entity acquired an item of plant in exchange for an item of equipment. The equipment has a carrying amount of $15 000 and a fair value of $20 000. The journal entry to record the acquisition of the plant will show:

• A) a loss on acquisition of $5000.
• B) a gain on sale of $5000.
• C) proceeds on sale of equipment of $15 000.
• D) proceeds on sale of plant of $15 000.

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Definitions:

Share Dilution

A reduction in existing shareholders' ownership percentage caused by the issuance of new shares.

Government Support

Financial or non-financial aid provided by the government to businesses, industries, or individuals in forms such as grants, loans, or tax incentives.

NCI

NCI, or Non-Controlling Interest, refers to the share of ownership in a subsidiary that belongs to shareholders other than the parent company.

Entity Method

An accounting technique used in consolidations, treating the parent and subsidiary as separate entities for the calculation of minority interest and consolidated net income.