The Accounting Concept That Indicates Assets Should Be Reported at the Price

question 208

Multiple Choice

The accounting concept that indicates assets should be reported at the price received to sell an asset is the

• A) economic entity assumption.
• B) monetary unit assumption.
• C) fair value principle.
• D) historical cost principle.

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Definitions:

Depreciation Expense

Depreciation expense is the charge recognized in each accounting period for the cost of an asset's decline in value due to use or obsolescence over time.

Residual Value

The estimated value of an asset at the end of its useful life, relevant in depreciation calculations and lease contracts.

150%-Declining-Balance

A method of accelerated depreciation which computes depreciation expense at 150% of the straight-line rate.

Depreciation

The accounting method of allocating the cost of a tangible or physical asset over its useful life.