Use the Following Data for Questions 10 Through 17

question 6

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.
-Assume that instead of dealers, both Sawyer and Brown are machine manufacturers and use the machines in production. Assume the exchange lacks commercial substance. At what amount will Brown record Machine A?

• A) $540,000.
• B) $621,000.
• C) $729,000.
• D) $810,000.

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Definitions:

Signal-detection

a psychological theory that aims to quantify the ability to discern between information-bearing patterns and random patterns that distract from the information.

Sensory Input

Information received through the senses, which is then processed by the brain.

Perception

The process of organizing, identifying, and interpreting sensory information in order to represent and understand the environment.

Signal-detection Theory

A psychological theory that explains how we discern between information-bearing patterns and random noise in the environment.