Assume That a Business Trades in an Old Cash Register

question 67

Multiple Choice

Assume that a business trades in an old cash register for a new one.Under the income tax method,

• A) a gain may be recognized,but a loss cannot be recorded.
• B) the cost of the new asset is recorded as the cash paid for the new asset.
• C) the asset account is debited for the difference between the original cost of the old asset and the fair market value of the new asset.
• D) the cost of the new asset is recorded as the book value of the old asset plus the cash amount paid or to be paid.

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Definitions:

Arbitration

A method of resolving disputes outside the courts, where the parties to a dispute refer it to one or more persons (the arbitrators, arbiters, or arbitral tribunal), whose decision (the award) they agree to be bound by.

Arbitrator

An independent, neutral third party chosen to settle a dispute or conflict between two parties outside of the court system, often in labor or commercial disputes.

Contract

A legally binding agreement between two or more parties that outlines the terms and conditions of a particular arrangement.

Mediation

A form of conflict resolution where a neutral third party helps disputing parties find a mutually acceptable solution.