The Duce Company Has Five Plants Nationwide That Cost a Total

question 45

Multiple Choice

The Duce Company has five plants nationwide that cost a total of $100 million. The current fair value of the plants is $500 million. The plants will be recorded and reported as assets at

• A) $100 million.
• B) $600 million.
• C) $400 million.
• D) $500 million.

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Definitions:

Face Value

The nominal or dollar value printed on a security or currency, representing its legal value.

Note Receivable

A written promise for amounts to be received by a business, typically including interest.

Allowance Method

An accounting technique used to account for bad debts, where an estimated amount is deducted from accounts receivable to reflect possible non-collection.

Bad Debts

are amounts owed to a company that are considered uncollectible, leading to a financial loss.