A Gain or Loss on the Sale of a Long-Term

question 162

Multiple Choice

A gain or loss on the sale of a long-term investment using the equity method is calculated by taking the difference between the cash received and:

• A)fair value of the investment.
• B)lower-of-cost-or-market value of the investment.
• C)cost of the investment.
• D)carrying value of the investment.

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Definitions:

Reportable Segment

A part of an organization that engages in business activities from which it may earn revenues and incur expenses, and whose operating results are regularly reviewed by the organization's chief operating decision maker.

Operating Segment

A component of a business that engages in business activities from which it may earn revenues and incur expenses, including segments with related products, services, or geographic areas.

Quick Assets

Liquid assets that can be rapidly converted into cash without significantly affecting their value, including cash, marketable securities, and receivables.

Current Receivables

Financial assets expected to be converted into cash within one year, including money owed by customers (accounts receivable).