Nix Corporation Sold Equipment for $40,000

question 184

Multiple Choice

Nix Corporation sold equipment for $40,000. The equipment had an original cost of $120,000 and accumulated depreciation of $60,000. Ignoriing the tax effect, as a result of the sale

• A)net income will increase $40,000.
• B)net income will increase $20,000.
• C)net income will decrease $20,000.
• D)net income will decrease $40,000.

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Definitions:

Mental Ability

The capacity to perform cognitive tasks, reason, solve problems, and adapt to new situations.

Understand Obligations

Recognizing and comprehending the duties and responsibilities that are part of an agreement or contract.

Capacity

The legal ability or competency of a person or entity to enter into binding contracts or perform certain acts.

Illegal Clause

A provision in a contract that is prohibited by law and therefore unenforceable.