Chapter 12 (1)

Question 1

Fair Value

Answer 1

is what the assets would have cost if they had been purchased at that time.

–> Rational & unbiased estimate of the potential market price of a good, service, or asset

Question 2

Allowance for doubtful accounts

Answer 2

Continues to track and collect existing accounts receivable and some of these are expected to be uncollectible

–> In addition, this maintains the control and subsidiary relationship between Accounts Receivable and the accounts receivable subsidiary ledger

–>Is a reduction of the total amount of A/R appearing on a company’s balance sheet; listed as a deduction