The Gain That Occurs When the Owner of an Asset

question 24

Multiple Choice

The gain that occurs when the owner of an asset actually sells it for more than she paid for it is called a(n)

• A) dividend.
• B) realized capital gain.
• C) coupon payment.
• D) economic profit.

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Definitions:

Incremental Borrowing Rate

The interest rate a borrower would have to pay to take on additional debt, used as a benchmark in lease accounting to measure lease liabilities in the absence of a specified rate in the lease.

Major Overhaul

Extensive repairs and maintenance on an asset that significantly extend its useful life or enhance its performance.

Non-Cancelable

A term referring to agreements or contracts that cannot be terminated or voided by one or both of the parties involved before the end of the term without penalties.

Service Life

The estimated period an asset is expected to be useful and productive for its intended purpose before it becomes obsolete or too costly to maintain.