Use the Information Above to Answer the Following Question

question 27

Multiple Choice

Use the information above to answer the following question.Assume the company decides to sell the computer system on July 1,2015 for $1,000,000.Which of the following is not true concerning the journal entry(ies) required on July 1?

• A)The depreciation expense must be recorded for 6 months,January 1 to July 1.
• B)The Computer System asset account must be credited for $1,600,000 to record the sale.
• C)The amount of the debit to accumulated depreciation at the date of sale is $612,500.
• D)The loss on the sale is $12,500.

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Definitions:

Fair Hedge

A hedge that is accounted for at fair value, with changes in fair value recognized in earnings, to offset the exposure of an identified risk.

Foreign Currency Option

A financial contract allowing the owner to convert funds from one currency to another at a predetermined rate on a specific date, without being required to do so.

Put Option

A financial contract giving the holder the right to sell an asset at a specified price within a specific time.

Cash Flow Hedge

A cash flow hedge is a type of hedge that is used to manage exposure to variability in cash flows, particularly those related to forecasted transactions that could affect profit or loss.