S 1 -5 (L earn i ng Obj ec tiv e 2: A pp ly u nderly i ng acco u n ti ng conce pt s, ass umpti ons,

S1-5 (Learning Objective 2: Apply underlying accounting concepts, assumptions, and principles) Identify the accounting concept, assumption, or principle that best applies to each of the following situations:

a.    Wendy’s, the restaurant chain, sold a store location to Burger King. How can Wendy’s determine the sale price of the store—by a professional appraisal, Wendy’s cost, or the amount actually received from the sale?

b.   Inflation has been around 5.5% for some time. Lake Carolina Realtors is considering measuring its land values in inflation-adjusted amounts.

c.    General Motors wants to determine which division of the company—Chevrolet or GMC—is more profitable.

d.   You get an especially good buy on a computer, paying only $500 when it normally costs

$1,200. What is your accounting value for this computer?