When Plant Assets Are Exchanged

question 85

Multiple Choice

When plant assets are exchanged:

• A) the old asset does not need to be removed from the books.
• B) the new asset will be debited for the list price of the asset.
• C) the gain or loss on the exchange is equal to the difference between the fair value and the book value of the old asset.
• D) total assets increase.

---

Definitions:

Limited Resources

Refers to the finite amount of resources available for production of goods and services, including labor, capital, and natural resources.

Market Supply Curve

A graphical representation showing the relationship between the price of a good and the total output of that good supplied by all producers in the market.

Identical Firms

Refers to companies within the same industry that have similar methods of production, costs, and characteristics, making their products essentially indistinguishable.

Linear Marginal Cost

A situation where the cost of producing one additional unit of a product or service remains constant, represented graphically as a straight line.