AMC Issues a Note in Exchange for a Machine with No

question 121

Multiple Choice

AMC issues a note in exchange for a machine with no stated interest rate. In accounting for the transaction:

• A)The machine should be depreciated over the note's term to maturity.
• B)If fair values of the note and machine are unavailable, the note should be recorded at its present value, discounted at the market rate of interest.
• C)Both the note and machine are recorded at the face amount of the note or the fair value of the machine, whichever is more clearly determinable.
• D)The note is recorded at its face amount unless the fair value of the machine is readily available.

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Definitions:

Counterfactual Thinking

Imagining alternatives to past or present events or circumstances.

Illusory Correlation

The perception of a relationship between two variables when none exists, often leading to confirmation of erroneous beliefs.

Magical Thinking

The belief that one's thoughts, words, or actions can influence the outcome of events in the physical world in a manner not governed by the laws of physics or logic.

Theory Perseverance

The persistence of one's initial beliefs, even in the face of contradicting evidence or after the evidence for their foundation has been discredited.