Barkley Company Will Receive $400,000 in a Future Year

question 21

Multiple Choice

Barkley Company will receive $400,000 in a future year. If the future receipt is discounted at an interest rate of 8%, its present value is $252,068. In how many years is the $400,000 received?

• A) 5 years
• B) 6 years
• C) 7 years
• D) 8 years

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Definitions:

Identifiable Assets

Assets that can be separated from the business and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract.

Financial Records

Documentation that tracks the financial activities and condition of a business or individual.

Equity Method

An accounting technique used by companies to assess the profits earned by their investments in other companies, reflecting the share of the profits or losses in their own financial statements.

Common Shares

Equity securities that represent ownership in a company, entitling holders to vote at shareholder meetings and receive dividends.