Gamma IncIs Considering the Purchase of a Machine Costing $450,000, Having

question 87

Multiple Choice

Gamma Inc.is considering the purchase of a machine costing $450,000, having a useful life of five years.Depreciation would be recognized using the straight-line method, and the machine would have no residual value at the end of its useful life.The estimated total net income from the machine is $600,000.The average investment for the machine is:

• A) $600,000.
• B) $150,000.
• C) $225,000.
• D) $300,000.

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Definitions:

Formed

The process of creating or establishing something, often referring to the formation of a legal or structured entity such as a company or agreement.

Advantages and Disadvantages

A consideration of the positive and negative aspects of a particular decision, action, or strategy.

Respondeat Superior

A legal doctrine holding an employer or principal legally responsible for the wrongful acts of an employee or agent, under certain conditions.

Vicarious Liability

A legal principle that holds one party responsible for the actions of another under certain conditions, typically within employment contexts.