When an Asset Is Exchanged for a Similar Asset and a Gain

question 23

Multiple Choice

When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is:

• A) credited to Gain on Exchange of an Asset.
• B) recorded in the other income section of the income statement.
• C) absorbed into the cost of the new asset.
• D) subtracted from the cost of the new asset.

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Definitions:

Writ of Execution

A court order authorizing the enforcement of a judgment, typically involving the seizure of assets belonging to a judgment debtor.

Federal Court

A court established by the authority of a federal government that deals with problems between states, the constitution, and laws made by Congress, as opposed to state courts.

Breeding Fees

Charges paid for the service of breeding animals, typically involving purebred animals in agricultural or sporting contexts.

Civil Litigation

The process of resolving private disputes through the court system, as opposed to criminal proceedings.