Amanda Company Purchased a Computer That Cost $10,000

question 114

Multiple Choice

Amanda Company purchased a computer that cost $10,000.It had an estimated useful life of five years and a residual value of $1,000.The computer was depreciated by the straight-line method and was sold at the end of the third year of use for $5,000 cash. Which of the following statements correctly describes the computer sale?

• A)Assets and stockholders' equity both increase by $5,000.
• B)Assets decrease $5,000 and stockholders' equity is not affected.
• C)Assets and stockholders' equity both decrease by $400.
• D)Assets and stockholders' equity both increase by $400.

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Definitions:

Pulmonary Artery

A major blood vessel that carries blood from the heart to the lungs for oxygenation.

Nucleus

An organelle in eukaryotic cells containing most of the cell's genetic material, responsible for controlling the cell's activities.

Hemoglobin

A protein found in red blood cells that binds oxygen in the lungs and releases it to tissues across the body, essential for aerobic respiration.

Albumin

A family of globular proteins, the most common being serum albumin in the blood, which helps maintain osmotic pressure and transport lipids and steroids.