The Adjusted Basis of an Asset May Be Determined by The

question 103

Multiple Choice

The adjusted basis of an asset may be determined by the:

• A)Selling price + gain realized.
• B)Selling price − gain realized.
• C)Selling price + capital improvements − accumulated depreciation.
• D)Original basis + capital improvements − selling price.
• E)None of these

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Definitions:

Equivalent Units

A concept used in cost accounting to express the amount of materials, labor, or overhead costs in terms of fully completed units.

Physical Units

A measure of quantity, such as items or pieces, used to quantify the inventory, output, or production level of a business.

FIFO Method

An inventory valuation method where the first items acquired are the first ones sold or used, standing for First In, First Out.

Average Cost Method

An inventory costing method where the cost of goods sold and ending inventory values are determined by averaging the costs of all items available for sale during the period.