Tom Owns Five Activities,and He Elects Not to Group Them

question 69

Multiple Choice

Tom owns five activities,and he elects not to group them together as a single activity under the "appropriate economic unit" standard.During the year,he participates for 120 hours in Activity A,150 hours in Activity B,140 hours in Activity C,110 hours in Activity D,and 100 hours in Activity E.

• A)Activities A,B,C,D,and E are all significant participation activities.
• B)Tom is a material participant only in Activities A,B,and C.
• C)Tom is a material participant in Activities A,B,C,D,and E.
• D)Tom is not a material participant in any of the activities.
• E)None of the above.

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Definitions:

Fair Value Option

An accounting strategy that allows companies to measure and report certain financial assets and liabilities at their fair values.

Long-term Notes Receivable

Loans or credit extended to others that are not expected to be repaid within the next twelve months, reported as long-term assets on the balance sheet.

Fair Value

The price that would be received for selling an asset or paid for transferring a liability in an orderly transaction between market participants at the measurement date.

Non-interest Bearing Notes

A type of debt instrument that does not accrue interest over time, requiring the borrower to repay only the principal amount.