Final answer:
The correct answer is d) Azmina should include the value of the gifted furniture in her financial statement. It is a common accounting practice to include all assets, whether purchased or gifted, to accurately reflect the company's financial position.
Step-by-step explanation:
The main answer to the student's question is d) Azmina should include the value of the gifted furniture in her financial statement. Even though the furniture was received as a gift, it is now an asset of the business and it needs to be recorded at its fair market value. This is because, according to accounting principles, all assets—regardless of how they were acquired—must be reported in the financial statements. The value of the assets may affect the business's financial position and performance, and stakeholders rely on accurate financial statements for decision-making.
Explanation in more than 100 words: Assets are resources controlled by a business as a result of past events and from which future economic benefits are expected to flow to the entity. In Azmina’s case, the furniture is used in the waiting area for her clients, which undoubtedly contributes to the business’s service offering. Therefore, it must be recorded at its acquisition cost, which in this case, would be its market value at the time of the gift.By including this furniture as part of her assets on the balance sheet, Azmina ensures that her financial statements reflect the true value of her business's resources. Omitting the furniture could result in a misleading representation of her company’s net assets.