Question

To be recorded as an asset, an item must meet four specific conditions. Three of them are: it must have been acquired at measurable cost, it must be obtained or controlled by the entity, and it must have been obtained or controlled in a past transaction. Which one of the following is the fourth condition?
A) The item must have a measurable resale valueB) It must be expected to have future economic benefitsC) It must have been fully paid forD) The entity must have a legal document confirming ownership of the item

Answer 1

Answer: To be recorded as an asset, an item must meet four specific conditions. They are:

1) It must have been acquired at measurable cost.

2) It must be obtained or controlled by the entity.

3) It must have been obtained or controlled in a past transaction.

4) "B) It must be expected to have future economic benefits".

Answer 2

Answer:B) It must be expected to have future economic benefits.

Explanation:Future Economic Benefit means the asset has the capacity to generate cash flows on its own or when combined with other services or in any other equivalent ways. An assets can directly result to cash flow generation or it can play a role in other ways which are used to generate cash flows.

For example machines produce goods that can be sold to make cach therefore machines are assets that have future economic benefits.