Sally Is a Corporate Sales Representative for Computer City

question 32

Multiple Choice

Sally is a corporate sales representative for Computer City.Sally receives a monthly travel allowance from Computer City to cover her travel costs (transportation,food,lodging,entertainment,etc. ) .If Sally is not required to account to Computer City for the use of the travel advance
I.Sally will not have to show any aspect of the travel reimbursement or expenses incurred if she spends all of the reimbursement on valid travel expenses.
II.Sally will only have gross income to the extent her travel allowance exceeds her actual costs.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

---

Definitions:

Recoverable Amount

The higher of an asset's fair value less costs of disposal and its value in use, reflecting the estimated amount that can be realized from the asset.

Carrying Value

The book value of an asset on a company’s balance sheet, calculated as the original cost minus accumulated depreciation or amortization.

Equity Method

An accounting method used to assess the investments in associate companies where the investor has significant influence but does not control the company outright.

Consolidation Process

The method of combining the financial statements of a parent company with those of its subsidiaries to present as one entity.