Pearson Company Bought a Machine on January 1, 2014

question 231

Multiple Choice

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The book value of the machine at the beginning of the third year would be

• A) $144,000.
• B) $120,000.
• C) $96,000.
• D) $48,000.

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Definitions:

Special Purpose Financial Statements

Financial statements designed to meet specific needs of users that are not addressed by standard financial statements, often required by contractual or regulatory requirements.

Economic Benefits

The advantages or gains that an organization receives or expects to receive from its business activities.

Capital

Refers to the financial assets or resources that individuals, companies, or governments use to fund their operations and invest in their ventures.

Income

The money received, especially on a regular basis, for work or through investments.