Use the Following Information for Questions

question 35

Multiple Choice

Use the following information for questions
A machine cost $120,000, has annual depreciation of $20,000, and has accumulated depreciation of $90,000 on December 31, 2006.On April 1, 2007, when the machine has a market value of $27,500, it is exchanged for a machine with a fair value of $135,000 and the proper amount of cash is paid.The exchange lacked commercial substance.
-The new machine should be recorded at

• A)$107,500.
• B)$122,500.
• C)$132,500.
• D)$135,000.

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Definitions:

Volatile

Refers to the degree of variation in the price of a financial instrument over a period of time, indicating the level of risk associated with it.

Standard Deviation

A statistical measure that represents the dispersion or variability of a dataset relative to its mean.

Diversified

A strategy that involves spreading investments across various financial instruments, industries, and other categories to reduce exposure to risk.

Portfolio

A range of investments held by an individual or institution, including stocks, bonds, commodities, and more, often diversified to spread risk.