Sacramento Company Owns a Fixed Asset with an Original Cost

question 47

Multiple Choice

Sacramento Company owns a fixed asset with an original cost of $100,000.Magic Company estimates it will use the asset for 4 years, at which time the asset can be sold for $10,000.The book value of the asset after three years of use is_____.

• A)$32,500
• B)$50,000
• C)$45,000
• D)$100,000

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Definitions:

Articles of Incorporation

Official documents filed with a government body to legally document the creation of a corporation.

Directors' Power

The authority granted to the board of directors of a company to make decisions on behalf of the company within the scope of their roles.

Tender Offer

A financial term referring to a public bid by a person or company proposing to buy shares from shareholders of a public company at a specified price within a certain time.

Full Market Value

The highest price a willing buyer would pay and a willing seller would accept for an asset in an open and competitive market.