When Determining Whether to Record an Asset as a Fixed

question 58

Multiple Choice

When determining whether to record an asset as a fixed asset, what two criteria must be met?

• A) Must be an investment and must be long lived.
• B) Must be long lived and must use the asset in a productive manner.
• C) Must be short lived and must be a tangible asset.
• D) Must be a tangible asset and must be an investment.

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Definitions:

Liability

The state of being legally responsible or obligated to settle a debt, fulfill a contractual duty, or compensate for harm or loss.

Authorizing

The act of giving legal or formal approval for something or someone to proceed or act in a certain way.

Enforce

To compel obedience to a law, rule, or obligation through the imposition of penalties or other legal mechanisms.

Warranty Liability

Legal obligation of a seller to compensate the buyer for losses caused by defects or failures in the product warranted.