Strum Hardware Has Total Assets of $50,000

question 113

Multiple Choice

Strum Hardware has total assets of $50,000.What are the total assets if new equipment is purchased for $10,000 cash?

• A)$45,000
• B)$50,000
• C)$55,000
• D)$60,000

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Definitions:

Cash-Equivalent Price

The cash-equivalent price is the price of a service or asset if paid for in cash at the same time, as opposed to being financed.

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Consideration

In legal and accounting terms, it refers to the value, either monetary or a promise of action, that is exchanged between parties in a contract.

Residual Value

the estimated value that an asset will have at the end of its useful life.