Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

Which of the following amounts is NOT included in the computation of the amount realized in an exchange?

Cash received from the exchange

The fair market value of property received

The original cost of the property given up

Liabilities assumed by the other party

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Verified step by step guidance

Step 1: Understand the concept of 'amount realized' in an exchange. The amount realized is the total value received by a taxpayer when disposing of an asset. It includes cash received, the fair market value of property received, and liabilities assumed by the other party.

Step 2: Review the components that are included in the computation of the amount realized. These typically include: (1) cash received, (2) the fair market value of any property received, and (3) liabilities assumed by the other party.

Step 3: Identify the item that is NOT included in the computation of the amount realized. The original cost of the property given up is not part of the amount realized; instead, it is used to calculate the adjusted basis of the property for determining gain or loss.

Step 4: Clarify the distinction between 'amount realized' and 'adjusted basis.' The adjusted basis is the original cost of the property, adjusted for factors like depreciation or improvements, and is subtracted from the amount realized to compute the gain or loss.

Step 5: Conclude that the original cost of the property given up is excluded from the computation of the amount realized, as it is part of the adjusted basis calculation instead.