If Valtrex Inc. Sells a Major Plant Asset

question 157

Multiple Choice

If Valtrex Inc. sells a major plant asset:

• A)depreciation expense should be recorded through the date of sale.
• B)the book value of the asset should be credited to the asset account.
• C)no gain should be recognized if depreciation expense was taken on the asset before the asset was sold.
• D)a loss should be recognized, but not a gain, if depreciation expense was taken on the asset before the asset was sold.

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Definitions:

Rational Consumers

Individuals who aim to maximize their utility or satisfaction based on their preferences and information when making consumption choices.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, leading to competition based on factors other than price.

Excess Capacity

A situation where a firm is operating below its maximum output level, indicating that it has available resources that are not being fully utilized.

Economic Profits

The offset between gross income and total liabilities, embracing both visible and hidden expenses.