A company is uncertain whether a complex transaction should result in an asset being recorded at $100,000 or at $150,000.Under the conservatism principle,it should choose to show it at $100,000.

Question

Quizplus · Accepted Answer

The conservatism principle states that if there is uncertainty, a company should choose the option that is more conservative or less likely to overstate assets or income. Therefore, in this case, the company should record the asset at the lower value of $100,000.

A Company Is Uncertain Whether a Complex Transaction Should Result