If the firm measures an asset at acquisition cost on the balance sheet, it measures expenses based on the _____ of the asset consumed.
A)fair market value
B)acquisition cost
C)current value
D)liquidation value
E)replacement value

Question

Quizplus · Accepted Answer

When the firm measures an asset at acquisition cost on the balance sheet, it typically matches expenses based on the amount of the asset consumed. This is because the acquisition cost is the original cost of acquiring the asset, and the firm incurs expenses as the asset is used up over time. Therefore, choice B (acquisition cost) is the most appropriate option for measuring expenses related to the consumption of the asset.

If the Firm Measures an Asset at Acquisition Cost on the Balance