The method most commonly used to report defaults and repossessions is

Question $6$ options:

$1)$

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 answers are correct.