Wilshire Purchased Equipment at the Beginning of 2011 for $19,000

question 57

Multiple Choice

Wilshire purchased equipment at the beginning of 2011 for $19,000. Wilshire decided to depreciate the equipment over a 6-year period using the straight-line method. Wilshire estimated the equipment's salvage value at $1,000. The estimated fair market value at the end of 2011 was $18,000. Which of the following statements is correct concerning Wilshire's financial statements at December 31, 2011?

• A) The book value of the equipment is $15,000.
• B) The book value of the equipment is $16,000.
• C) The total accumulated depreciation is $3,167.
• D) The equipment will be reported on the balance sheet at it fair market value of $18,000.

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Definitions:

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true return on investment.

Nominal Interest Rate

The stated rate of interest on a loan or financial investment, not adjusted for inflation.

Real Rate Of Interest

The rate of interest an investor expects to receive after allowing for inflation.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment, indicating the health of an economy.