When an Asset Is Sold, a Gain Is Reported That

question 136

Multiple Choice

When an asset is sold, a gain is reported that is equal to the amount that the

• A) proceeds received exceed the carrying amount of the asset sold.
• B) proceeds received exceed the original cost of the asset sold.
• C) carrying amount exceeds the proceeds received for the asset sold.
• D) proceeds received exceed the depreciable cost of the asset sold.

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Definitions:

Transfer of Shares

The process of moving ownership of shares from one party to another, either through sale, gift, or inheritance, commonly documented by a stock transfer form.

De Facto Corporation

A business entity that operates like a corporation but without legal incorporation status, often recognized by courts for liability purposes.

Defective Incorporation

A legal term referring to the situation where a company has been incorrectly or incompletely formed, potentially affecting its legal status and liabilities.

Personal Liability

The legal responsibility of an individual to settle debts or damages out of their own assets.