Stuart Michelson Has Invested in Several Pieces of Real Estate

question 111

Multiple Choice

Stuart Michelson has invested in several pieces of real estate.Which one of the properties that Stuart owns would be considered commercial property?

• A)4 bedroom home that he does not rent out
• B)20 acre tract of farm land that is sitting idle
• C)Fourplex that he rents to college students
• D)100 acres of land in the mountains that he hopes to subdivide and sell as residential lots
• E)Vacation home

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Definitions:

Materiality

A principle that dictates that all significant information that could influence the decision-making process of users of financial statements should be disclosed.

Fair Value

The estimated market value of an asset or liability, based on current prices in an open market.

Financial Statements

Formal records that outline the financial activities and condition of a business, including balance sheets, income statements, and cash flow statements.