When Certain Kinds of Assets Are Built That Require Public

question 37

Multiple Choice

When certain kinds of assets are built that require public welfare and safety expenditures at the end of the asset's life: 

• A) these asset retirement costs are expensed when asset retirement occurs.
• B) a liability simultaneously arises.
• C) these estimated future expenditures are added to the carrying value of the asset.
• D) this fact is only reported in the financial statement footnotes.

---

Definitions:

Tariff

A tariff is a tax imposed by a government on imported or exported goods to regulate trade, often to protect domestic industries.

Free Trade

An economic policy that allows imports and exports between countries with minimal governmental restrictions or tariffs.

Consumer Surplus

The discrepancy between the sum consumers are ready and capable of paying for a service or product and the sum they actually spend.

Producer Surplus

The discrepancy between what producers anticipate accepting for a good or service and what they end up being paid.