Use the Following Data for Questions 10 Through 17

question 48

Multiple Choice

Use the following data for questions 10 through 17. Each question is independent of the other questions.
Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for
Machine A.
-Given the assumptions in 10 above, at what amount will Machine B be recorded on Sawyer's books?

• A) $469,565.
• B) $729,000.
• C) $540,000.
• D) $631,566.

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Definitions:

Purchasing-Power Parity

A theory that states prices of goods and services should equalize across countries when expressed in a common currency, accounting for exchange rates.

Money Supply

The grand total of money available in an economy at a specific time, encompassing cash, coins, and deposits in checking and savings accounts.

Domestic Goods

Goods that are produced within a country's borders and are part of its national output.

Foreign Currency

Money or legal tender issued by a country other than one's own, used for international trade and investment.