Intermediate Acounting E2-8

Intermediate Acounting E2-8 - EXERCISE28 (a) Depreciation...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
EXERCISE 2-8 (a) Depreciation   is   an   allocation   of   cost,   not   an   attempt   to   value  assets. As a consequence, even if the value of the building is  increasing, costs related to this building should be matched with  revenues   on   the   income   statement,   not   as   a   charge   against  retained earnings. (b) A   gain   should   not   be   recognized   until   the   inventory   is   sold.  Accountants follow the historical cost approach and write-ups of  assets are not permitted. It should also be noted that the revenue  recognition principle states that revenue should not be recognized  until it is realized or realizable and is earned. 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
(c) Assets should be recorded at the fair market value of what is given  up or the fair market value of what is received, whichever is more  clearly evident. It should be emphasized that it is not a violation of 
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/27/2010 for the course FIN 82571 taught by Professor Sharp during the Fall '10 term at CSU Sacramento.

Page1 / 2

Intermediate Acounting E2-8 - EXERCISE28 (a) Depreciation...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online