Which of the following is the amount of money that would be realized upon the sale of the asset at some point in the future, less the costs associated with owing, operating and selling it?
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A. B. C. D.A
The correct answer to the question is A. Net realizable value.
Net realizable value refers to the estimated amount of money that would be received from the sale of an asset in the future, after deducting the costs associated with owning, operating, and selling it. It is an important concept used in accounting and financial analysis.
Here's a detailed explanation of each option:
A. Net realizable value: This is the correct answer. Net realizable value represents the estimated selling price of an asset, less any direct costs necessary to prepare the asset for sale and complete the sale transaction. It takes into account the expenses related to owning, operating, and selling the asset. It reflects the amount of money that the entity can expect to receive from the sale of the asset.
B. Going concern: Going concern refers to the assumption that a business will continue to operate for the foreseeable future. It is the assumption that the entity will not be forced to liquidate its assets or cease operations due to financial difficulties. Going concern does not directly relate to the amount of money realized from the sale of an asset.
C. Cost: Cost refers to the amount of money that was initially paid or incurred to acquire or produce an asset. It represents the historical amount spent to obtain the asset and does not consider any future changes in value or costs associated with owning, operating, and selling the asset.
D. Fair value: Fair value is the estimated price at which an asset could be exchanged between knowledgeable and willing parties in an arm's length transaction. Fair value does not specifically take into account the costs associated with owning, operating, and selling the asset. It focuses on the market value of the asset based on current market conditions.
In summary, net realizable value best represents the amount of money that would be realized upon the sale of an asset in the future, after deducting the costs associated with owning, operating, and selling it.