On January 3, 2010, Boyer Corp

question 10

Multiple Choice

On January 3, 2010, Boyer Corp.owned a machine that had cost $200,000.The accumulated depreciation was $120,000, estimated salvage value was $12,000, and fair value was $320,000.On January 4, 2010, this machine was irreparably damaged by Pine Corp.and became worthless.In October 2010, a court awarded damages of $320,000 against Pine in favor of Boyer.At December 31, 2010, the final outcome of this case was awaiting appeal and was, therefore, uncertain.However, in the opinion of Boyer's attorney, Pine's appeal will be denied.At December 31, 2010, what amount should Boyer accrue for this contingent asset?

• A)$320,000.
• B)$260,000.
• C)$200,000.
• D)$0.

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Definitions:

Economic Slowdown

A period of reduced economic activity and growth rates compared to previous periods.

Net Profit

The amount of money that remains from revenues after all operating expenses, taxes, and costs have been subtracted; a key indicator of financial health.

ACP

Accelerated cost recovery system, a method used for calculating depreciation expenses for tax purposes.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specified period, indicating operational efficiency.