O'Brien's Construction Plc Exchanged Equipment That Had a Book Value

question 1

Multiple Choice

O'Brien's Construction Plc exchanged equipment that had a book value of £40 000 for a truck that had a book value (in the other entity's books) of £38 000.The fair value of the equipment is £45 000 and the fair value of the truck is £48 000.Further cost incurred to prepare the truck for use by O'Briens was £700 for signage.What is the acquisition cost of the truck?

• A)£48 700
• B)£40 000
• C)£48 000
• D)£45 700

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Definitions:

Incubation

In problem-solving and creativity research, the process during which an unconscious recombination of thought processes occurs, potentially leading to a solution after a period of rest or distraction from the problem.

Conditional Reasoning

Conditional reasoning is a form of logical thinking that involves establishing a relationship between two propositions where one is a condition of the other.

Visual Memory

The ability to remember information encoded in visual form, which can be used to recall facts, details, or the physical location of objects.

Chunking

A process of reorganizing (or recoding) materials in working memory by combining a number of items into a single, larger unit.