ER Received a Building as a Donation at No Cost

question 41

Multiple Choice

ER received a building as a donation at no cost, except for transfer costs and some ordinary repair costs. The company agreed to start operations within one year with an expected payroll for 1,000 employees. The preferred financial accounting at the transfer date is for ER to:

• A) record the building at its current market value plus transfer costs and repair costs.
• B) record the building at its current market value less transfer and repair costs.
• C) make only a memorandum entry (i.e. no journal entry) to reflect that there was no acquisition cost.
• D) record the building at the sum of transfer costs and repair costs.
• E) record the building at market value plus transfer costs.

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Definitions:

Dollar Value

The worth or purchasing power of the United States dollar in terms of the amount of goods or services that one unit of money can buy.

Trade Deficit

A situation where a country's imports exceed its exports, leading to a negative balance of trade.

International Basis

Engaging in business or transactions that involve entities in multiple countries or global considerations.

Current Account Deficit

A measurement of a country's trade where the value of goods and services it imports exceeds the value of goods and services it exports.