- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 7. Analysis of Long-Term Assets
- Subject 3. Derecognition of Assets
CFA Practice Question
True or False?
The financial reporting of gains and losses on exchanges of plant assets is different than the income tax reporting of gains and losses on exchanges of plant assets.
Correct Answer: True
For financial reporting purposes, gains and losses are recognized on disposals and trade-ins. For income tax reporting purposes, gains or losses on exchanges of plant assets are not recognized but are used to adjust the recorded value of the new asset.
User Contributed Comments 2
| User | Comment |
|---|---|
| foshanboy | how about if the assets are dissimilar assets,which enable the loss or gain to be recognized either in financial reporting or tax reporting |
| johntan1979 | That's beyond the requirements of CFA Level I |