The method most commonly used to report defaults and repossessions is
A) provide no basis for the repossessed asset thereby recognizing a loss.
B) record the repossessed merchandise at fair value, recording a gain or loss if appropriate.
C) record the repossessed merchandise at book value, recording no gain or loss.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

Recording the repossessed merchandise at fair value is the most commonly used method to report defaults and repossessions, as it provides a more accurate portrayal of the asset's worth at the time of repossession. This allows for gains or losses to be recorded appropriately. Option A does not provide any basis for the asset's worth, while Option C assumes that the book value is still accurate despite the default. Option D is not correct as there is a correct answer.

The Method Most Commonly Used to Report Defaults and Repossessions