If the Carrying Amount of an Asset Equals Its Fair

question 108

Multiple Choice

If the carrying amount of an asset equals its fair value at the date of sale,

• A) a gain on disposal is recorded.
• B) no gain or loss on disposal is recorded.
• C) the long-lived asset is fully depreciated.
• D) a loss on disposal is recorded.

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Definitions:

FIFO Costs

First In, First Out, a cost flow assumption for inventory valuation where the oldest inventory items are recorded as sold first.

FIFO Inventory

A method of inventory valuation where the first items placed into inventory are the first ones sold; stands for First-In, First-Out.

Periodic Inventory

An inventory accounting system where inventory counts and cost of goods sold (COGS) are determined at the end of an accounting period.

Inventory Balance

The total value of a company's inventory at the end of an accounting period, comprising raw materials, work-in-progress, and finished goods.