Which of the Statements Below Is FALSE

question 27

Multiple Choice

Which of the statements below is FALSE?

• A)The current book value of an asset serves as the basis for determining the gain or loss at disposal.
• B)Book value is the original cost of the asset plus the accumulated depreciation.
• C)A gain on disposal is recognized when the selling price of the asset is greater than the book value.
• D)A loss on disposal is recognized when the selling price of the asset is less than the book value.

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Definitions:

Consolidated Financial Statements

Financial statements that show the aggregated financial position and results of operations for a parent company and its subsidiaries.

Subsidiary

A company that is controlled by another company, commonly known as the parent company, through ownership of more than half of its voting stock.

Unrealized Loss

A loss that results from holding onto an asset that has decreased in price, but has not yet been sold.

Trading Investments

Investments in securities for the purpose of selling them in the near term to generate profit from short-term price fluctuations.