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WAEC Financial Accounting 2013 Question 39

Question 39

Accounting Concepts and Conventions

When the going concern concept is no longer applicable, the fixed assets are recorded at their

  1. A.net book value.
  2. B.realizable value.
  3. C.gross value.
  4. D.revalued amount.
Show the answer and explanation

Answer: B (realizable value.)

Explanation

If the business is expected to close, its assets are valued at what they would fetch if sold (realisable or break-up value), not at book value.