Mitchell Corporation Bought Equipment on January 1, 2014

question 288

Multiple Choice

Mitchell Corporation bought equipment on January 1, 2014. The equipment cost $180,000 and had an expected salvage value of $30,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would be

• A) $180,000.
• B) $150,000.
• C) $130,000.
• D) $50,000.

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Definitions:

Uncollectible Receivable

A debt owed to a company that is considered unlikely to be paid by the debtor, classified as a loss.

Working Capital

Current assets minus current liabilities, representing the short-term liquidity and operational efficiency of a business.

Raw Materials

Any materials that go into the final product.

Book Value per Share

The equity available to common shareholders divided by the number of outstanding shares, indicating the value of a company’s equity on a per-share basis.