Question

The method most commonly used to report defaults and repossessions is?

1) provide no basis for the repossessed asset thereby recognizing a loss
2) record the repossessed merchandise at fair value, recording a gain or loss if appropriate
3) record the repossessed merchandise at book value, recording no gain or loss
4) none of these

Answer 1

The most commonly used method to report defaults and repossessions is to record the repossessed merchandise at fair value and record a gain or loss if appropriate.

Step-by-step explanation:

The method most commonly used to report defaults and repossessions is to record the repossessed merchandise at fair value, recording a gain or loss if appropriate. This method ensures that the financial statements reflect the current value of the repossessed asset and captures any gain or loss incurred through the repossession process.