When a Firm Sells or Abandons an Asset, How Is

question 55

Multiple Choice

When a firm sells or abandons an asset, how is the gain or loss to be recognized on the income statement measured?

• A) The difference between cash proceeds received and the carrying value of the asset.
• B) The difference between cash proceeds received and the acquisition value of the asset.
• C) The difference between cash proceeds received and the accumulated depreciation of the asset.
• D) The difference between the book value of the asset and the carrying value of the asset.

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Definitions:

Competitive Advantage

A situation or factor that gives a business an advantageous or dominant position over its rivals in the industry.

Monopolistic Market Position

A competitive standing where a single company or entity dominates the supply of a particular product or service in a market.

High Profits

Earnings that significantly exceed the costs and investments of a business, reflecting strong financial performance or market advantage.

Stakeholder Element

An aspect or component that is significant to the interests, concerns, or objectives of individuals or groups that have a vested interest in the outcome of a project or organization.