If Noncash Consideration Such as Stock of a Publicly-Traded Company

question 93

Multiple Choice

If noncash consideration such as stock of a publicly-traded company is given in a revenue contract, then the value to be used for the transaction price should be ________.

• A) fair value of stock
• B) book value of stock
• C) historical cost of stock
• D) net present value of revenue

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Definitions:

Obsolescence

The process through which a product or technology becomes outdated and no longer used, often due to advancements or changes in consumer preferences.

Depletion

An accounting method used to allocate the cost of extracting natural resources, such as minerals or timber, from the earth, reflecting the consumption of the resource over time.

Expense Account

An account used in accounting to record costs or expenses incurred by a business or individual for operational purposes.

Metal Ores

Naturally occurring solid materials from which metals can be extracted through mining and processed for use.