On January 3, 2014, Benton Corp

question 126

Multiple Choice

On January 3, 2014, Benton Corp. owned a machine that had cost $300,000. The accumulated depreciation was $180,000, estimated salvage value was $18,000, and fair value was $480,000. On January 4, 2014, this machine was irreparably damaged by Pogo Corp. and became worthless. In October 2014, a court awarded damages of $480,000 against Pogo in favor of Benton. At December 31, 2014, the final outcome of this case was awaiting appeal and was, therefore, uncertain. However, in the opinion of Benton's attorney, Pogo's appeal will be denied. At December 31, 2014, what amount should Benton accrue for this gain contingency?

• A) $480,000.
• B) $390,000.
• C) $300,000.
• D) $0.

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Definitions:

Beginning Inventory

The estimated financial value of items ready to be sold at the onset of a ledger year.

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific moment, showing assets, liabilities, and shareholders' equity.

Adjusted Trial Balance

A statement listing all accounts and their balances after adjustments, used to verify the equality of debits and credits before generating financial statements.

Financial Statement Column(s)

Specific sections within financial statements that organize and present data in a structured manner, facilitating analysis and comparison.