Question Details

Plant assets purchased on long-term credit contracts should be accounted for at 



S1.	When cash is involved in an exchange having commercial substance.
a.	gains or losses are recognized in their entirety.
b.	a gain or loss is computed by comparing the fair value of the asset received with the fair value of the asset given up.
c.	only gains should be recognized.
d.	only losses should be recognized.

 
	S2.	The cost of a non-monetary asset acquired in exchange for another non-monetary asset and the exchange has commercial substance is usually recorded at
a.	the fair value of the asset given up, and a gain or loss is recognized.
b.	the fair value of the asset given up, and a gain but not a loss may be recognized.
c.	the fair value of the asset received if it is equally reliable as the fair value of the asset given up.
d.	either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company.

	P3.	Ringler Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will
a.	be reported in the Other income and expense section of the income statement.
b.	effectively reduce the amount to be recorded as the cost of the new asset.
c.	effectively increase the amount to be recorded as the cost of the new asset.
d.	be credited directly to the retained earnings account.

	4.	Plant assets purchased on long-term credit contracts should be accounted for at 
a.	the total value of the future payments.
b.	the future amount of the future payments.
c.	the present value of the future payments.
d.	none of these.

	5.	When a plant asset is acquired by issuance of ordinary shares, the cost of the plant asset is properly measured by the
a.	par value of the shares.
b.	stated value of the shares.
c.	book value of the shares.
d.	fair value of the shares.



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